Coalition parties reach final agreement on reforms
Negotiations on fiscal reforms by the government involving the leaders of the three coalition parties lasted well into Tuesday night but at the end of them Prime Minister Mirek Topolanek was able to announce a deal had been reached. The centre-right government, proposing to rebalance taxes and cut social benefits to counter the fiscal deficit, agreed on a final package just hours before the lower house continued debate.
"I think that the agreement is a proper one and that there is nothing that should prevent coalition MPs from voting for it."
The proposal saw fine-tuning by the coalition on income tax: if passed, the proposal will introduce a flat 15 percent tax rate for individuals (calculated in accordance with the super gross wage), demolishing existing tax brackets. The number would drop even lower in 2009, to 12.5 percent. Corporate taxes would also fall to 19 percent the same year. Through an expected increase in revenues and cuts in the social sector, the government is aiming to slash the ballooning fiscal deficit, which, for example, has pushed back adoption of the European currency to at least 2012.
Even so, some reservations remain: Christian Democrat MP Ludvik Hovorka, for example, has repeatedly said he will vote against, apparently the only coalition MP to do so. Mr Hovorka opposes the fact that children under the age of fifteen will not be exempt from new cash fees at the doctor's. Still, according to the numbers, the government should win enough votes to see its proposal passed. There's no need to remind any of the leaders in the coalition it's a vote the government needs to win in order to survive. A final reading on the reforms is expected next week.