PM's VAT offer not the solution, ODS deputy says

Prague, Oct 16 (CTK) - Czech PM and Civic Democrat (ODS) head Petr Necas' proposal of a compromise version of the controversial tax package does not solve the problem and it is "desperately insufficient as self-reflection after the [ODS's failure in the regional] polls," ODS rebel deputy Petr Tluchor told CTK yesterday.

His fellow ODS rebel deputies, too, have voiced dissatisfaction with the compromise presented by Necas at the ODS executive council's meeting on Monday.

Negotiations on the tax package will therefore continue between the ODS and its six rebelling deputies whose support the government needs to push the package through. It has linked the package to a confidence vote.

A couple of months ago, the Chamber of Deputies rejected the draft package, which raises both VAT rates by one percentage point, by the votes of the opposition plus the six ODS rebels, who said raising taxes goes counter to the ODS's programme.

Finance Minister Miroslav Kalousek (TOP 09) then said the draft 2013 state budget bill reckons with the package coming into force as from next year and that the country is threatened with a stop gap budget if the package were not passed.

The government submitted the package to parliament again in the same wording and linked it to a confidence vote. Negotiations with the rebels on changing the package started simultaneously.

On Monday, Necas proposed that only the lower VAT rate be raised, from 14 to 15 percent, while the higher rate should stay at 20 percent. He said the compromise should be acceptable both in the ODS and for the coalition partners TOP 09 and LIDEM.

"The prime minister's proposal not to raise the higher VAT is desperately insufficient as self-reflection of the election outcome," Tluchor told CTK.

"After the ODS's historic debacle, the whole government policy must be revised instead of toying with a single percentage point of VAT. This further deepens the problem instead of solving it. The ODS must change itself, otherwise it will collapse as a political party. The peace for work, demanded by the prime minister, is a path towards the ODS's end," Tluchor said.

Another rebel MP, Tomas Ulehla, said "the negotiations continue."

"I don't consider the partial 'minichange' to the stabilisation [tax] package an adequate response to the demand of not making people's everyday life more and more expensive. I expect us to achieve a bigger progress towards a compromise," Ulehla said on behalf of the rebels.

Another ODS rebel, Jan Florian, said they "prefer no raising of taxes. Nothing has been agreed upon for now," he said.

Rebel Radim Fiala described Necas's proposal a "step in the right direction."

"It shows that a solution does exist. I believe that a solution will be found that would make raising taxes in the Czech Republic unnecessary," Fiala said.

Kalousek previously said the package is a necessary step for the state budget deficit to be gradually reduced as planned.

On Monday, Kalousek said by not raising the basic VAT rate, the state would lose 10 billion crowns in revenues next year, and it would have to reduce its expenditures accordingly.

TOP 09 yesterday said it is ready for a compromise on condition the ODS guarantees the passing of another two crucial bills, the pension reform and the church property restitution.

($1=19.219 crowns)