ČT: FinMin considers all options for VAT change

Prague, Oct 28 (CTK) - The Czech Finance Ministry is working with all options of changes in value added tax (VAT) rates when preparing the new state budget draft for next year, Deputy Finance Minister Ladislav Mincic told the Czech Television yesterday.

Mincic, who was a guest of discussion programme Otazky Vaclava Moravce (Questions of Vaclav Moravec), also expressed doubts about whether lawmakers will manage to agree on the changes in time.

If they fail to reach an agreement, VAT rates will unify at 17.5 percent as of January. The unified rate was approved last year, but the current proposals are to change it.

Originally, the government's proposals reckoned with a hike in both VAT rates by 1 percentage point as of next year. But some deputies, elected to the lower house of the parliament for government coalition Civic Democrats (ODS), oppose this.

A compromise proposal offered by Prime Minister Petr Necas counts on keeping the basic VAT rate at 20 percent and raising the lowered VAT rate from 14 to 15 percent.

This option would lead to a drop in the revenues of the state budget for 2013 by Kc10bn compared with the original plans.

"We are working with all options, but not with the same amount of intensity," Mincic said.

The budget draft must be based on legislation, that is a 17.5 percent VAT rate, said Mincic. But he added he does not see much hope that the legislation process would be successfully completed by end-November.

Finance Minister Miroslav Kalousek is to submit the new state budget draft for next year to members of the parliament's lower house by November 23.

The original version of the budget draft was returned by the lower house to the government for redrafting on Wednesday following Kalousek's request. The reason behind the step was uncertainty about whether the government's package of stabilisation measures, including a hike in VAT rates by 1 percentage point to 15 and 21 percent, will be approved.

If a unified 17.5 percent VAT rate takes effect as of January, it will be the worst possible option for the Czech private sector, Czech Confederation of Industry vice-president Radek Spicar told the Czech Television.

Spicar estimates that the costs related to tax changes which only entrepreneurs from his confederation will have to pay will amount to hundreds of millions of crowns.