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TOP 09 head proposes to cut VAT to 10 and 20 percent

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Prague, Nov 28 (CTK) – Czech rightist opposition TOP 09 chairman Miroslav Kalousek, former finance minister, said on Monday he will present his proposal to cut VAT to the pre-crisis level of 10 and 20 percent to the Chamber of Deputies on Wednesday within the second reading of the government’s tax package.

The Czech Republic now has three VAT rates of 21, 15 and 10 percent.
Petr Fiala, who heads the other rightist opposition party, the Civic Democrats (ODS), told CTK that the Czech tax system needs to be simplified and the economic situation enables to reduce taxes.

Kalousek said he also wants to propose that the 7 percent solidarity tax surcharge for people with high incomes be abolished.

He said the government wants to abolish taxation of the special bonuses for years in service for former soldiers and security corps members, through which it grants an exception to this group of people.

Kalousek said that is why he wants to return money to all those who are entitled to this in his view through cutting the VAT rates.

He said the government parties criticised an increase in taxes in the past, but they have not cut them and keep the proceeds from them.

Fiala said the current economic growth makes it possible to reduce the taxes for citizens.
He mentioned the ODS’s previous proposal to introduce only two VAT rates of 10 and 21 percent, which the party submitted in 2014, and its further proposals to simplify and reduce VAT.

All these proposals were rejected by the government coalition together with the opposition Communists (KSCM), Fiala said.
The government is comprised of the Social Democrats (CSSD), the ANO movement and the Christian Democrats (KDU-CSL).

The VAT taxes rose to the current 15 and 21 percent in 2013 within a tax package presented by the former government of Petr Necas (Civic Democrats, ODS), in which Kalousek was the finance minister. The higher rates were to be in force until the end of 2015.

According to previous tax rules, there was to be a single VAT rate of 17.5 percent as from this year. However, the incumbent government abolished the plan through an amendment that introduced another lower rate of 10 percent.

It has applied to books, baby formula and medicaments, including veterinary ones, since 2015.

Newspapers and magazines may be added to the list next year on the proposal of the Communists (KSCM). The bill is yet to be discussed by the Senate and signed by President Milos Zeman.

The government justified its opposition to the introduction of a single VAT rate saying this would raise the prices of food and other social items because VAT would increase by 2.5 percentage points.

Kalousek, when he was finance minister, claimed the single rate would cut the VAT burden by 24 billion crowns.

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