Informace o publikaci
ESPN Thematic Report on Financing social protection – [Czech Republic]
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Rok publikování | 2019 |
Druh | Účelové publikace |
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Popis | Compared to the EU average of 28.2% of GDP, Czech social expenditure was about one-third lower (18.9% of GDP) in 2016. The low level of expenditure is relatively stable over time: between 2005 and 2016. In the long-term, the increasing expenditure on the old age and sickness/health functions takes resources away from the other functions. Funding of the social insurance system has been very stable over time in the Czech Republic. Almost three-quarters of social protection expenditure was financed from social security contributions in 2016, the fourth quarter was financed by the general government. The social security contributions are paid by employees and employers, the proportion of their payments being approximately 1:3. The contribution rate payable by self-employed persons corresponds to the sum of the rates payable by the employee and the employer. The payments of contributions have no floor except for the self-employed. In 2008, ceilings on social security payments were introduced. The biggest part of social protection expenditure is connected with old-age pensions. Its share increased from 37.3% (2005) to 43.7% (2016) of all social protection expenditure. The healthcare (HC) insurance rate has been stable for a long time despite the fact that the system regularly produces a structural imbalance between income and expenditure. Non-contributory benefits (family-related benefits and social assistance) are financed from tax revenues. In the Czech system, tax reliefs are an essential source of support for families with children. The most relevant development after 2008 was the increase in the child tax credit. Financing through social insurance contribution has a major impact on the tax costs of labour that increase the overall costs of labour. Fortunately, the Czech Republic is still a converging economy with low labour costs. Different tax expenditure has a mixed impact on the labour market. In the pension system, there is a mismatch between the relatively flat rate of the pension benefit and the contributory payments. Pension rights of workers in arduous and hazardous jobs have been inadequately addressed for a long time. As regards the healthcare system, there are significant disparities between the average contributions of employees and self-employed persons: the base for calculating the contributions of self-employed earners corresponds to only 50% of their profits. The state still pays too little for state-insured persons. The existing mix of financing options does not create any incentives for health promotion. Our recommendations include: i) general recommendations: to start a national debate on the composition of funding sources for social protection, to limit the impact of economic performance on the (procyclical) debate on the expenditure of the social system, ii) taxation: to limit the impact of the growth of tax costs on total labour costs, with a primary focus on lower-income taxpayers, to periodically re-evaluate the child tax credit, to consider the abolition of the low-income spouse tax credit and a tax rebate on a spouse iii) pension system: to separate the financing of the pension system from the state budget, to consider rebalancing the calculation of the pension benefit so that the flat basic amount is financed to a greater extent from general taxes, to address the issue of retirement of the WAHJ group, while having employers more financially involved in this change, iv) healthcare: to increase patients’ co-payments for routine and not very serious services, to reflect health-risk behaviour in the calculation of contribution rate, and to dedicate, at least partly, some revenue from the Pigouvian “corrective” taxes (mainly the tobacco tax) to fund payments for state-insured persons. |