Czech Republic

Government set for another nail biter


The Civic Democratic Party (ODS) led government of Petr Nečas looks set for another crisis this week when legislators will be asked to vote on a third increase in value-added tax since the start of the economic crisis.

The government wishes to raise the VAT rates by 1% to 21% and 15% next year. With 100 of the 200 seats in the Chamber of Deputies the government relies on independents to win their votes. This time, however, there is dissent from within the ODS. Yesterday Czech President Vaclav Klaus also announced that he hoped “common sense will prevail” and that the planned tax increase would be unsuccessful.

Prime Minister Petr Nečas says the increase is necessary to cut the budget gap but others say that it will depress demand further in the economy. The prime minister has indicated that his government would resign if they lose the vote.

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