Lawmakers to vote on tax package by November 7

Prague,Oct 21 (CTK) - The lower house of Czech parliament should take a vote on the package of tax changes by November 7 with regard for legislative deadlines and so that it may take effect next January together with the state budget, the house's chairwoman Miroslava Nemcova said on Czech Television (CT) Sunday.

The lawmakers will start to discuss the package that aims to stabilise public budgets at the session of the Chamber of Deputies that opens on Tuesday, October 23.

Several lawmakers for the senior government Civic Democratic Party (ODS), of which Nemcova is first deputy chairwoman, are opposed to the draft package and so the government may not have enough votes to push it through.

This would end in it its fall because it tied the package with a confidence vote.

According to information from the ODS, the vote on the package might be only taken after the party's election congress that ends on November 4.

The opposition is, however, against postponing the decision-making as well as against the proposed changes to the taxes.

The Chamber of Deputies discussed the package in the first reading at its previous session. The remaining two readings are on the agenda of the October session that is to end on November 2 according to the schedule.

"The session may be extended until after the congress. It has happened many times that a session, originally scheduled to last two weeks, eventually lasted three weeks," Nemcova said in CT's Questions of Vaclav Moravec (OVM).

The draft package counts with raising the VAT rates from 14 to 15 percent and from 20 to 21 percent. This has already been included in the draft budget for next year.

President Vaclav Klaus has criticised the planned rise in VAT.

Seven ODS lawmakers want the current rates to be preserved. Prime Minister and ODS chairman Petr Necas has proposed a compromise: 15 and 20 percent rates.

Unless agreement is found, a uniform VAT of 17.5 percent would be introduced as from January.

The opposition Social Democrats (CSSD) are against further raising VAT as well as against adjourning the vote on the package.

"The decision on taxes should be made by parliament. We will by no means support a situation where the ODS first thinks about it at its congress," CSSD deputy chairman Lubomir Zaoralek said in OVM Sunday.

The junior government TOP 09 has not received any compromise proposal from the ODS, the party's deputy chairwoman Helena Langsadlova said in OVM.

She said the aim of the tax package is not to raise taxes, but to decrease deficits and to prepare for a balanced budget by 2017.

Langsadlova said if the state's revenues decreased, expenditure would have to be lowered by the same amount.

Zaoralek said the government could make up for the decrease in revenues if it scrapped the pension reform.

Under the reform, people may redirect 3 percentage points from the 28 percent of their gross pay they send to the state pay-as-you-go system to private funds if they add 2 percentage points from their own as from next year.

Zaoralek said the government does not have the mandate to do such changes after it lost the recent regional and Senate elections.

The CSSD said previously it would abolish the pension reform if it won the next general election.

Simunek said the Communists would like the lowered VAT rate to be returned to 5 percent while they would propose progressive taxation for individuals as well as firms to provide the necessary money.

The pension reform has been passed, but President Vaclav Klaus has vetoed the implementing bill on which the Chamber of Deputies will take a new vote.

Langsadlova said if the bill were not passed, negotiations on a postponement of the validity of the reform would have to be launched, which would be bad.