ČSSD: PM should replace ministers over VAT changes

Prague, March 11 (CTK) - Czech Prime Minister Petr Necas (Civic Democrats, ODS) should replace the finance and the labour and social affairs ministers, Miroslav Kalousek and Jaromir Drabek (both TOP 09), respectively, over changes in the plans to unify VAT, Bohuslav Sobotka said Friday.

Sobotka, acting chairman of the opposition Social Democrats (CSSD), said Kalousek and Drabek look like amateurs and the government would retain the rest of confidence if it made changes in its lineup.

Sobotka said the CSSD was surprised at the centre-right government coalition having changed the original agreement on VAT that was first to be unified at 20 percent, with a few exceptions.

Now the Czech Republic applies two rates, 10 and 20 percent.

The government says VAT must be raised to fund the prepared pension reform.

On Thursday, the ODS, TOP 09 and Public Affairs (VV) agreed to keep two rates next year as well, namely, 14 percent instead of the present 10 percent, and 20 percent. As from 2013 the two rates would be unified at 17.5 percent without any exceptions.

"This proves that the government coalition is absolutely incompetent," Sobotka said.

He said the government has no analyses justifying the rates.

Turning to the planned pension reform, Sobotka said it "should help stabilise the pay-as-you-go system, it should not threaten it."

The government coalition proposes to take away 3 percent from the pay-as-you-go system to private funds on condition that people under 35 themselves contribute another 2 percent of their pay. This "second pillar" is not to be mandatory.

Sobotka said this is no pension reform. He said it is only advantageous for 30 percent of the economically active inhabitants with higher incomes.

However, all people will pay for them with the raised VAT rate, Sobotka said, adding "the system is not set justly."

Sobotka said the CSSD does not agree with a sole VAT rate either. He said other sources to finance the pension reform should be discussed.

Sobotka said if the CSSD formed a new government after the next elections, it would "work for adjusting the tax reform and for moving socially-sensitive items back to the lower VAT rate."

He mentioned medicines and foodstuff particularly. He said the CSSD does not agree with a high VAT on books either.

Sobotka said two current VAT rates, 10 and 20 percent, should be preserved.

He said the CSSD was also surprised at Necas's statement that he wants to link the reform with a confidence motion.

Sobotka said this means that Necas does not want agreement with the CSSD on the pension reform because the CSSD cannot outvote the government.

He said the pension reform should be passed as a constitutional law of which the VV also speaks.

The government coalition parties have a majority of 118 votes in the 200-seat Chamber of Deputies. Three-fifths of votes, or 120, are necessary for a constitutional bill to make it through.

The CSSD conference that will be held on March 18-20 is to deal with the pension reform and the VAT. The CSSD leadership recommended that the party conference rejected the planned 17.5-percent VAT rate and oppose any changes weakening of the pay-as-you-go pension system and taken in the interest of the rich.