Page 6 - IDEA Studie 12 2018 Dopady danove reformy

• The amendment would not help employees or self-employed individuals with very low incomes, who currently pay no income tax, nor those self-employed individuals who pay social and health insurance contributions at the obligatory minimum level. These individuals would not see their tax rate or their insurance contributions reduced, and the amendment would thus have no consequences for them. • The new possibility of deducting 75 % of paid insurance contributions would change the way that the self-employed calculate their tax base from their gross profit. The same gross profit would now result in a lower contribution base, and so it is likely that after the amendment came into force we would see an increase in the number of self-employed individuals who pay insurance contributions at the obligatory minimum level. • The existence of the obligatory minimum contribution level for insurance means that the consequences of the amendment would vary widely among self-employed individuals with low incomes. For some, the changes would not result in any reduction in taxation, while for others with a similar gross profit it could reduce taxation by as much as 1.7 percentage points. • The proposed amendment would reduce public budget revenues by some 21 billion CZK per year. 4