Both of the VAT rates currently used in the Czech Republic are likely to rise by one percent under a new government plan to raise revenues. Czech Prime minister Petr Nečas said that corporate tax, on the other hand, will remain flat, claiming that this formula should keep a handle on inflation while encouraging businesses. But with negotiations about the budget deficit currently ongoing, the announcement, which would raise the main VAT rate to 21 percent, has triggered sharp criticism from the opposition Social Democrats. They’re proposing more progressive taxes and a corporate tax rate rise, while leaving VAT tariffs flat. The government says a 3-year freeze of pensions is in the works as is a plan to double the tax on energy.
