Constitutional Court overturns building savings reform

The Constitutional Court has overturned a government reform to building savings, satisfying a complaint raised by the opposition Social Democrats. A special 50% tax rate on deposits from state support was cancelled effective immediately; the court ruled that the rest of the law would remain valid until the end of the year. In addition to the introduction of the tax, the legislation, in force since the beginning of this year, decreases state contributions to building savings from 15 to 10% of the amount saved. The court found the law unconstitutional in that it retroactively affects contracts signed under the previous conditions. The delay in the enforcement of the law will allow the government time to bring the reform into line with the court’s recommendations. President Václav Klaus came out strongly against the verdict on Wednesday, accusing the court of involving itself in politics and itself acting unconstitutionally. Finance Minister Miroslav Kalousek said the decision will increase the state budget deficit by roughly six billion crowns.