ESPN welcomes Czech and Lithuanian social inclusion reforms

The European Social Policy Network (ESPN) has welcomed recent initiatives that aim to strengthen social inclusion in Lithuania and the Czech Republic.

The Lithuanian ruling coalition has proposed to increase the marginal personal income tax (PIT) rate and to lower the pace of tax allowance increases, which would result in 70 million euros additional tax revenue in 2020. The amendment will improve social justice by distributing tax liabilities more proportionally among average and high earners. Moreover, it would enhance funding opportunities for the basic part of pensions and child allowances.

Lithuania is therefore addressing very important issues such as income inequality, redistribution and public sector financing. In fact, the level of income inequality in the country is one of the highest in the EU, at 37 per cent.

In June, the Czech Ministry of Labour and Social Affairs completed the drafting of a Housing Allowance Act, which would merge two existing housing benefits from 2021, aiming to end the so-called poverty business and to better target those in need.

The increase in housing benefit expenditure resulted in abuse of the system and the normative costs imposed by the state did not sufficiently reflect regional and local differences in housing prices.

However, the ESPN notes that the draft law includes controversial elements, such as very restrictive conditions and increased bureaucracy for assessing claims, that could hinder the next stages of the legislative process.