The Czech government managed to survive last week’s vote of confidence by the skin of its teeth, but most political analysts see its staying power is less as less than solid. The weekly Ekonom has looked at the likely outcome of premature elections – a win for the leftist Social Democrats – and analyzed the impact this would have on fiscal policy. It predicts that the era of cuts would end in a hurry, to be replaced by measures that would rovide demand support. Sweden is seen as the party’s primary model, but there would likely be pressure to reduce the VAT rate on items like food, while raising taxes on the wealthy. Telecoms and energy companies could see their tax rates rise from 21 to 30 percent. The magazine predicts as long as it’s still in the opposition, the Social Democrats will try to win support among disaffected coalition party members in blocking further changes to the tax code.
