Lower house approves tax cuts

The lower house of the Czech Parliament has approved a government plan to cut income taxes in an effort to help revive an economy hit by the coronavirus pandemic.

The lawmakers have reduced the main tax rate from 20.1% to 15% while the top earners will pay 23%.

The annual cost of the cuts will reach some 100 billion Czech crowns ($4.6 billion).

As part of the measure, the lower house agreed to increase the flat write-off on personal income tax by 3,000 crowns annually for the next two years.

The cuts split the ruling coalition. It was pushed through by the centrist ANO movement by Prime Minister Andrej Babis with help from the right-wing opposition.

The other coalition party, the leftist Social Democrats, was against it, arguing it is unjust for low-income employees.

The tax reform had already been approved by the upper house, the Senate. President Milos Zeman said he would not veto it, meaning it will become effective in January.

The Czech central bank expects the economy to contract by 7.2% this year before bouncing back with 1.7% growth next year.