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Czech Republic Urged To Review Labor Tax System

Thursday, May 18, 2017

The Czech Republic has been urged to make changes to the tax system to support women with children to return to work.

The International Monetary Fund, in its annual consultation with the country, said current policies were discouraging women from reentering the workplace. The IMF said that the country should in particular address imbalances in its labor taxes.

"Reducing the relatively high tax wedge and marginal tax disincentives to enter the workforce could increase labor force participation further," it said. "Similarly, incentives could be changed to deter early retirement."

Meanwhile the country could reduce house price fluctuations by phasing in value-based property taxation, the IMF said.

In February, Czech Prime Minister Bohuslav Sobotka announced plans for more progressive corporate and personal income taxes if his party wins this year's parliamentary elections, scheduled for October.

The tax plans of the ruling Czech Social Democrat Party (CSSD) were announced by Sobotka on February 21, and it is claimed that they will reduce the tax burden for 90 percent of salaried workers and 99 percent of small businesses.

At present, there is a single personal income tax rate of 15 percent on taxable income, although those earning more than 48 times the average annual salary pay an additional seven percent.