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.