Czech MPs have rejected the government’s plan to cut the budget deficit through a tax hike. The step threatens to shake up the government, as Premier Petr Nečas is determined to propose the same bill again and tie it to a confidence vote. His finance minister Miroslav Kalousek believes the measures will help to prepare a budget with a smaller deficit under 3 percent for 2013, down from 3.2 percent this year.
The ruling coalition currently has 100 seats of the 200 in the lower house, but the bill was opposed even by the members of Nečas’s own party (ODS), who say it violates the principles of the party. The country’s VAT rates would be increased by 1 percent to 15 and 21 percent, despite a previous tax hike this year that failed to bring in higher revenues.
