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FinMin: Gov’t does not plan higher taxes, except for tobacco

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Prague, Oct 21 (CTK) – The government does not plan to raise taxes, except for excise tax on cigarettes and tobacco, Finance Minister Andrej Babis (ANO) said in the Chamber of Deputies, the lower house of the Czech parliament, that started to debate the 2016 state budget in the first reading Wednesday.

Prime Minister Bohuslav Sobotka (CSSD) also mentioned an increase in tax on gambling.

The deputies are to approve the basic parameters of the state budget, such as the revenues, expenditures and the deficit projected at 70 billion crowns, Wednesday.

The right-wing opposition Civic Democrats (ODS) and TOP 09 called for the deficit to be reduced by 30 and 20 billion crowns respectively, at least.

The Chamber of Deputies has passed a gradual rise in excise tax on cigarettes and tobacco products in the next three years. Now, the Senate, the upper house of parliament, is to deal with the bill. This tax rise should bring an additional 3.3 billion crowns to the state budget.

The lower house is yet to approve a bill to increase gambling tax. The cabinet, which also comprises the junior Christian Democrats (KDU-CSL), expects the legislation to bring generate revenues of about two billion crowns.

“This is a budget stimulating our economic growth,” Deputy Prime Minister Babis said, adding that the budget would also promote consumption.

He called the draft budget responsible towards the next generations.

Sobotka praised the budget similarly.

He pointed out that the current economic growth was mainly due to the completion of the drawing of European funds, while no such a strong impulse was expected next year.

“This is why a pro-growth character of the budget is important,” he added.

The government expects the deficit to reach 1.9 percent of GDP this year, while next year, it should drop to 1.2 percent, Sobotka added.

“We will undoubtedly belong to the better half of the European Union,” he said.

TOP 09 proposes cuts in the state’s operational costs and non-investment subsidies to businesses.

Party deputy chairman Miroslav Kalousek Kalousek criticised the planned spending on investments being lower than during the period of crisis when he was financial minister.

He also criticised the planned increase in the number of civil servants by about 13,500 and accused the cabinet of failing to save money.

The ODS deputies’ group head Zbynek Stanjura criticised the government for doing nothing to draft a balanced budget or a surplus one.

The projected state budget deficit is too high in a situation where the government predicts the economy to grow by 2.5 percent and unemployment to drop to 5.5 percent, Stanjura said.

He suggested that taxpayers be relieved of 15 to 17 billion crowns worth of taxes if, for example, road tax or real estate acquisition tax were scrapped and the VAT rates decreased by one percentage point to 19 and 14 percent.

Communists (KSCM) deputy chairman Jiri Dolejs said the draft state budget bill is rather controversial and that it is a result of compromises struck by the coalition government.

He said it would be better to change the structure of expenditures rather than reduce them.

Like Sobotka, other members of his cabinet supported the 2016 budget bill in the debate.

Sobotka also talked about decreasing the share of the public debt in GDP from about 44 percent now to 40 percent.

The government is really consolidating public budgets, while not making any drastic cuts, Sobotka said.

He reiterated the budget priorities, such as support for investments, co-financing of European funds, the welfare agenda and security.

“The budget will bring stability to the Czech Republic,” Sobotka said.

The government expects the economy to grow by 2.5 percent and the unemployment rate to fall from the present 5.7 percent to 5.5 percent in 2016.

This year’s economic growth was mainly due to the fall of oil prices to a half and a more extensive drawing of European funds, Babis said.

The state plans to collect 44.6 billion crowns more in taxes and fees in 2016, compared to this year, to 619.7 billion crowns.

The expenditures on pensions are to rise by 5.9 billion crowns year-on-year to 400.7 billion crowns, while support for renewable energy sources would require 20.4 billion crowns and 4.5 billion would go to the constitutional officials’ salaries in 2016.

The 2016 state budget expenditures have been projected at 1,251 billion crowns, the revenues at 1,181 billion and the deficit at 70 billion crowns, which is 30 billion less than this year.

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