Last June, as part of a sweeping state finance reform, the Czech government approved a new tax cut for employers and employees alike. As a result, employers are able to divert less of their revenue -- specifically 1.5 percent less -- toward the state social security fund. The employer's contribution to the fund has been lowered from 8 to 6.5 percent of the employee's gross earnings. Employees' social security payroll tax rates have been cut as well from 12.5 to 11 percent.

These changes have just gone into effect this January, and for the first time this month, workers will see a difference, albeit a miniscule one, on their paychecks.

It behooves to say that the social security fund covers disability and unemployment insurance as well as retirement, the largest slice of the pie.

No matter the spin the media gives these changes and the promises that the pension portion of the government fund will remain untouched, the tax cuts reek of a backdoor effort to bankrupt the social security fund in order to force its privatization, a goal the right-wingers and big-wig financiers such as the IMF, have been pushing for, not without opposition.

Read more on my blog, Czechs in America.

Comment on this Post

Comments

Welcome to PulseWire and good luck with your blog.

How is the government saying they handle the shrinking social security fund? How much money will this tax cut provide to Czech citizens?

Jenna

As my piece says, the government is promising the tax cut won't touch the pension fund. However, I don't believe that. I also answered your second question in the piece. Czech citizens gain about 150 to 200 crowns per paycheck, which equates to roughly $7 to $10 per month.