CZECH: Lawmakers' rejection of government tax hike plan may lead to confidence motion

Record ID: 327835

  • Title: CZECH: Lawmakers' rejection of government tax hike plan may lead to confidence motion
  • Date: 5th September 2012
  • Summary: PRAGUE, CZECH REPUBLIC (SEPTEMBER 5, 2012) (REUTERS - ACCESS ALL) 1. WIDE OF CZECH PARLIAMENT IN SESSION 2. CZECH PRIME MINISTER PETR NECAS LISTENING 3. VARIOUS OF MPS AT SESSION 4. OPPOSITION SOCIAL DEMOCRATIC PARTY LEADERS ARRIVING FOR NEWS CONFERENCE 5. MEDIA 6. (SOUNDBITE) (Czech) OPPOSITION SOCIAL DEMOCRATIC PARTY LEADER BOHUSLAV SOBOTKA SAYING: "Deputies from the Social-Democratic party will of course vote against the bill proposing VAT increase. We will support the Senate's veto in this case." 7. MEDIA 8. (SOUNDBITE) (Czech) CZECH FINANCE MINISTER MIROSLAV KALOUSEK SAYING: "If the bill is rejected today we plan to re-submit it and the government will link it to a confidence motion". 9. MEDIA 10. KALOUSEK AND COLLEAGUES LEAVING 11. WIDE OF PARLIAMENT IN SESSION 12. MPS LISTENING TO SPEAKER 13. BOHUSLAV SOBOTKA ADDRESSING PARLIAMENT 14. MPS LISTENING
  • Embargoed: 20th September 2012 13:00
  • Keywords:
  • Location: Czech Republic
  • Country: Czech Republic
  • Topics: Economy,Politics
  • Reuters ID: LVA45TQKVEV6VZ1PP150ORQTO840
  • Story Text: The Czech parliament is expected to vote on a tax hike plan on Wednesday (September 5) which if rejected may lead to a confidence motion.
    The vote is a major test for Necas, who has pushed through several rounds of previous tax rises and spending cuts in order to slash the budget deficit even as the economy dropped into a recession late last year.
    "Deputies from the Social-Democratic party will of course vote against the bill proposing VAT increase. We will support the Senate's veto in this case," said Bohuslav Sobotka, head of opposition Social-Democratic party.
    The government has said it would re-submit the bill and link it to a confidence motion if the tax hikes are rejected in the lower house vote, expected later in the day.
    "If the bill is rejected today we plan to re-submit it and the government will link it to a confidence motion", said Czech Finance Minister Miroslav Kalousek.
    The bill looks likely to be rejected after Prime Minister Petr Necas failed to convince a group of rebels from his own party to back it.
    Necas's coalition has 100 votes in the 200-seat lower house and, even under ideal circumstances, needs the backing of independents to push through bills. The rebels, backed by President Vaclav Klaus, reject the planned one
    percentage point VAT hike, saying it would strangle an economy that needs stimulus rather than more austerity.
    If the legislation - proposing a 1-1.4 billion euro-per-year hike in value-added, personal income and other taxes - is rejected, re-submitting it along with a confidence motion could take several days or weeks.
    If Necas's government fell, it could be replaced by another administration or trigger early elections. But there is little appetite for early polls among the government parties, including the rebellious group, given the sharp drop in their popularity caused by two years of austerity measures and a string of graft scandals.
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