Czech Government Rejects Proposal to Decrease Compensation to Churches

The Czech government has rejected a proposal by opposition lawmakers to reduce compensation to churches and religious societies. Members of the ANO party suggested a change to the restitution law that would fix the interest rate on restitution payments to prevent the state from having to pay billions extra due to inflation. The government firmly rejected the proposal on Wednesday.

The proposal called for the interest on outstanding compensation payments to churches to be fixed at 2.26 or 3.23 percent annually. The aim was to prevent the compensation from increasing over the next few years by last year’s or this year’s inflation, which exceeded 10 percent.

Jiří Mašek, a member of ANO and the vice-chairman of the security committee, told Právo that they are advocating for a fix on interest rates because they believe it is fair to people, especially pensioners. “On the one hand, the government has reduced the valorization of pensions because it wants to save money, but it does not want to reduce compensation to churches, which will also be significantly valorized due to inflation. We consider this to be bad and unjust,” said Mašek.

Minister for Legislation Michal Šalomoun (for the Pirates) said after the government meeting on Wednesday that changing the law is impossible without changing contractual agreements with 16 churches and religious societies, guaranteeing a negotiated compensation amount.

Martin Baxa, Minister of Culture (ODS), told Právo that his department, responsible for church-related issues, is fundamentally opposed to the proposal because it would destabilize relations with the churches. He believes the opposition is not motivated by finding savings but by gaining political points.

According to the restitution law passed by the Nečas government in 2012, the state committed to paying 59 billion crowns in 30 installments, with interest on inflation.

The trouble began when inflation got out of control. Last year, the so-called inflation clause, calculated based on two years old inflation, increased outstanding compensation payments by 1.5 billion to 48 billion. This year, the debt is expected to increase by 1.8 billion because inflation in 2021 soared to 3.8 percent. And due to last year’s inflation, which reached a historic 15.1 percent, the amount owed to churches by the Czech state in 2024 will be evaluated at an incredible 6.9 billion crowns. This is according to a calculation of repayments by the Ministry of Finance, which Právo alerted to last autumn.

An average inflation rate of two percent was assumed in the original estimate of the impact on the state budget. Nobody expected that inflation could be eight times higher. The initial assessment was that inflation would increase the installment by 20 billion crowns. When 17 billion crowns in operating subsidies, from which churches will receive donations until 2029, are considered, the settlement with churches was supposed to come to 96 billion.

But if inflation remains high in the coming years, the restitution bill may increase by tens of billions. And that is a threat because even the churches do not want to hear about reducing their compensation. “I believe that the inflation clause is not about profit, but about preserving the value of money,” said Stanislav Přibyl, Secretary-General of the Czech Bishops’ Conference, to Právo.