New Czech govt to introduce three VAT rates, lowest on medicines

Předseda ČSSD Bohuslav Sobotka v diskusním pořadu České televize Otázky Václava Moravce.

published: 08.12.2013, 15:59 | updated: 08.12.2013 16:02:36

Prague - The new Czech coalition government now in making wants to introduce three VAT rates, a basic one and two lower, as from 2015, with the lowest rate applying to medicines, probable prime minister Bohuslav Sobotka (Social Democrats, CSSD) said on Czech Television (CT) today.

The lowest rate has not been defined yet. By its introduction the coalition wants to compensate the financial gap in the health sector after the planned abolition of patients´ regulatory fees, Sobotka said.

At present, there are two VAT rates of 21 and 15 percent.

It will depend on a discussion between the coalition parties, the CSSD, ANO and the Christian Democrats (KDU-CSL), to which items the new lowest VAT will apply, Sobotka said.

"It will be confirmed only after the partners reach final agreement on the coalition pact," he said.

On Saturday, Sobotka said the trilateral pact may be completed on Tuesday.

Sobotka said in CT´s discussion programme today that the state has been pouring money in the health insurance system, but as a result of the dramatic increase in VAT [by the previous rightist government] in the past years, it started "siphoning off money from the system back to the state budget."

"We want to remedy the situation in the health sector´s financing. A reduction of VAT on medicines is one of the steps to prevent the money, which the state and insurers´clients pay to the health insurance system, from being pulled out of it," Sobotka explained.

He said the proposed solution is better than a complete lifting of VAT on medicines, which would probably meet with criticism.

On Saturday, the CSSD-ANO-KDU-CSL negotiations failed to settle the problem of the parties´ different stands on which types of health regulatory fees should be abolished.

The KDU-CSL objected that the proposed scrapping of most fees, proposed by the CSSD, would cause a 5.5-billion-crown gap in the sector´s revenues.

The CSSD wants to fill the gap by further raising the health insurance contributions the state pays for selected groups of inhabitants such as children, pensioners and the unemployed.

This, however, would require raising the state revenues, i.e. taxes, which is opposed by both ANO and the KDU-CSL.

($1=20.122 crowns)


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