Business News


In Business News this week: Finance Minister Vlastimil Tlusty comes up with a controversial plan to circumvent a rise in VAT on construction work; the first issue of government bonds maturing in 30 years is heavily over-subscribed; another company considers suing the Czech state over the tender to introduce a lorry toll system - just weeks before it is due to begin; trade with Poland is thriving, and should rise further with Schengen enlargement; and an unusual order could help preserve the lace-making tradition of one south Bohemian town.

Tlusty puts forward way round VAT hike on construction

From the end of next year VAT on construction will rise from 5 percent to 19 percent, as an exception won at the time of EU accession comes to an end. Except, that is, in the case of what's called 'social housing', which currently mean flats up to 90 m sq - a concession won by the last government. But since then a European Commissioner has said national governments are free to define 'social housing'; that's given Finance Minister Vlastmil Tlusty the idea of declaring ALL new homes 'social'. His proposal has been controversial, with some saying it would be hard to defend in Brussels; the government on Wednesday postponed a decision on the matter.

Demand high for first 30-year bonds

The first-ever Czech issue of government bonds maturing in 30 years was heavily oversubscribed, the Finance Ministry said this week. Investors bought bonds worth over 13 billion CZK in the November 29 auction - there had been demand for 23 billion crowns worth. The bond issue comes after an upwards revision of planned borrowing for this year.

Another firm considers legal action over truck charges system

Photo: Radio Prague International
The saga of introducing a charging system for trucks on Czech roads continues; Hospodarske noviny reported Friday that a Swiss company which failed in the tender process, Ascom - Fela, is considering taking the Czech state to court for breaking its own conditions. This would not be the first legal challenge since the road toll contract went to Austria's Kapsch. It is due to begin trials of the charging system next week, ahead of full introduction on January 1.

Trade with Poland booming

Trade between the Czech Republic and Poland is booming - reaching over 200 billion CZK (around 10 billion USD) in 2006; that's according to preliminary data just released by CzechTrade. Poland is the Czech Republic's third biggest trading partner, after Germany and Slovakia, and the best-selling Czech products there include Skoda cars, machine tools and Zetor tractors. Analysts say trade should grow further when both countries join the Schengen border-free zone at the end of next year.

Unusual contract boon for lace making in Bohemian town

Lace makers from Sedlice in south Bohemia have received an unusual order - they've been asked to create lace for the bed linen used by the 19th century Austrian empress Elisabeth, Mlada fronta Dnes reported. Officials in Sedlice say the million-crown contract will help preserve the local lace-making tradition, which dates back to the mid-18th century.