# Czech Republic fiscal and taxation policy developments > Live situation record from CLSTR: https://clstr.news/situations/czech-republic-fiscal-and-taxation-policy-developments > Updated: 2026-09-05T08:12:00.000Z. Sources: 26. Developments: 3. The Czech Republic is facing intense political debate as the state budget deficit is projected to reach 389 billion CZK, the second highest in the nation’s history. The Czech National Budget Council warned that the structural deficit is expected to increase by one percentage point to 3.5 percent of GDP, marking the most substantial increase since the COVID-19 pandemic. Finance Minister Alena Schillerová has defended a proposal including a 150 billion CZK increase in expenditures, suggesting that higher taxes on gambling, nicotine, and potentially investment properties could reduce the deficit by 30 to 40 billion CZK annually over the next three years. Prime Minister Andrej Babiš has defended the budget, arguing that the deficit is necessary for essential investments in defense, healthcare, and modernization. Coalition tensions are intensifying as the Motorist party pushes for budget reductions of approximately 10 to 20 billion CZK, targeting spending on education, healthcare, and renewable energy subsidies. Health Minister Adam Vojtěch has suggested that 6 billion CZK in savings could be found within the healthcare system without impacting patient care. Meanwhile, SPD leaders have suggested canceling humanitarian benefits for Ukrainian refugees could save between 9 and 12 billion CZK. Public sentiment has turned sharply against the proposal; a Median poll indicates that 62 percent of the population finds the projected deficit unacceptable. To meet European Commission requirements by 2028, the administration may eventually need to cut spending by 130 to 140 billion CZK or significantly increase revenue through taxes on dividends, investment real estate, and addictive substances. ## Claims - The Ministry of Finance has proposed a budget deficit of 389 billion CZK. (corroborated by 15 sources) - The Motorist party proposes reducing the deficit by 20 billion CZK. (corroborated by 8 sources) - Tomio Okamura suggested that canceling humanitarian benefits for Ukrainian refugees could save 12 billion CZK. (corroborated by 5 sources) - The National Budget Council criticized the government's budget proposal. (corroborated by 4 sources) - 62 percent of people find the proposed 389 billion CZK budget deficit unacceptable. (corroborated by 3 sources) - The National Budget Council expects the current year's planned deficit of 310 billion CZK to be maintained. (corroborated by 2 sources) - The Ministry of Finance's budget proposal includes a 150 billion CZK increase in expenditures compared to the previous year. (corroborated by 2 sources) - 53 percent of ANO voters consider the proposed deficit acceptable. (corroborated by 2 sources) - The structural deficit is expected to rise by one percentage point to 3.5 percent of GDP next year. (single source) - The proposed budget for 2027 follows a trend started in 2026. (single source) - Finance Minister Alena Schillerová expects savings to be in the lower single-digit billions. (single source) ## Timeline ### 2026-09-05: Czech government faces backlash over proposed 389 billion CZK budget deficit The Czech government's proposed 389 billion CZK budget deficit faces backlash from 62% of the public and coalition partners, prompting calls for significant spending cuts and potential tax increases. 18 sources. https://clstr.news/cluster/czech-budget-debate-intensifies-over-record-389-billion-czk-deficit ### 2026-09-02: Czech Republic budget deficit projected to reach 389 billion CZK The Czech National Budget Council warns of a rising deficit, projected to reach 389 billion CZK next year. Finance Minister Alena Schillerová is considering tax increases to manage long-term fiscal stability. 15 sources. https://clstr.news/cluster/czech-finance-minister-considers-tax-hikes-on-gambling-and-investment-properties ### 2026-08-15: Czech Finance Minister to analyze VAT impact on transport Czech Finance Minister Alena Schillerová is awaiting an analysis to decide how 2028 VAT changes will affect public transport compensations and regional budgets. 2 sources. https://clstr.news/cluster/czech-finance-minister-to-analyze-vat-impact-on-transport --- Cite as: Czech Republic fiscal and taxation policy developments. CLSTR, https://clstr.news/situations/czech-republic-fiscal-and-taxation-policy-developments