The Czech government will keep tax rates flat this year, according to prime minister Petr Nečas, who claims the ban on tax hikes will remain in place until elections in 2014. While the news will come as a welcome relief to businesses and entrepreneurs, it assumes Nečas and his government will actually be around next year. The recent election of Miloš Zeman as the new Czech president, however, is certain to shuffle the political cards, leading to a realignment of power within the country. A consummate politician, Zeman is widely expected to destabilize both the current governing coalition as well as the opposition Social Democrats.
Czech VAT rates rose at the beginning of 2012 by 1 percent to 15% and 21%, as part of a tax package pushed through by the government just before Christmas, but the implementation was handled badly. Nečas’s current promise to leave tax rates alone for more than a year can be seen as an attempt to compensate for the chaos of recent months.
