Wednesday, 16 April 2014

Chamber passes VAT changes

20 December 2012

Prague, Dec 19 (CTK) - The lawmakers for the Czech centre-right government coalition in the Chamber of Deputies overrode the Senate veto yesterday and repeatedly passed a tax package that mainly raises the VAT rates by 1 percentage point to 15 and 21 percent as from January.

The bill will now go to President Vaclav Klaus for signature.

The government coalition needed minimally 101 votes to push through the package that was eventually supported by 102 lawmakers

The government lawmakers were joined by the unaffiliated deputies Pavel Bem (formerly Civic Democrats, ODS), Jaroslav Skarka, Milan Stovicek and Josef Dobes (all formerly Public Affairs, VV). Michal Doktor (formerly ODS) voted against the package.

"The passed VAT rise would drain about one thousand crowns from the purse of an average family," Martin Divis, director of the PricewaterhouseCoopers CR tax and legal department, said.

Bohuslav Sobotka, chairman of the opposition Social Democrats (CSSD), criticised the rise in prices as from next year due to the tax package.

"In the past six years of the rightist government the taxation of food, medicines, housing, heating and other socially sensitive items has tripled. I believe that this is the most dramatic growth in VAT within Europe," he said.

If the package did not make through the Chamber of Deputies, the previously approved change uniting the VAT rates at 17.5 percent would be valid as from January.

If Klaus used the deadline he has to sign the bill into law, two various VAT rates would be valid in January. First the uniform 17.5 percent rate that would be replaced with 15 and 21 percent set by the package during the month.

"The President knows well that the government submitted the bill to the Chamber of Deputies in time. If all government lawmakers behaved with responsibility, the bill would have been passed in September. The President is head of state and I firmly believe that he will not be extending the period of uncertainty," Finance Minister Miroslav Kalousek (TOP 09) told journalists.

Besides raising the VAT rates, the package introduces an additional 7 percent taxation of people with higher incomes, decreases the flat expense write-offs of the self-employed and abolishes tax deductions for employed old-age pensioners.

The bill lowers the oil consumer tax refund for farmers next year. It is to be completely abolished as from 2014.

The package introduces a higher tax levied on the transfer of real estate and abolishes health insurance caps.

The opposition yesterday criticised the government for that the vote on the tax changes is being taken only yesterday due to which citizens and businesspeople do not know what taxes they will pay next year.

Still before the vote on the tax package, the coalition government majority dismissed a Senate proposal to preserve the VAT rates at the current level, that is 14 and 20 percent.

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