New coalition deal saves Czech centre-right government
The Czech centre-right coalition government has overcome the most serious crisis it has gone through since taking office less than a year ago. On Thursday, coalition leaders struck a deal meeting most of the demands of the junior coalition party, Public Affairs, which has threatened to leave the government. The deal includes two more ministerial seats for Public Affairs, and a pledge to pursue the party’s agenda in taxation and fighting corruption.
The appointments were part of a deal reached on Thursday by the three coalition parties – the Civic Democrats, TOP 09 and Public Affairs – to keep the government in place.
The junior coalition member Public Affairs had threatened to leave the government by the end of June if they were not granted two more seats in the 16-member cabinet, and if their coalition partners did not respect their views on issues such as the fight against corruption and higher taxation of gambling.
“We put down in writing our political agreements concerning the reforms of the pension and health care systems, as well as the overhaul of justice, public administration and our anti-corruption strategy. And we also agreed on some changes in taxation policy.”
The prime minister also said that the government will link a vote of confidence in the lower house to an income tax bill that will impose higher taxes on gambling beginning in January, 2012.
“We will propose to the government and to the three parties’ deputies groups to link the income tax bill – including the establishment of a new gambling tax – with a vote of confidence in the coalition government.”
However, it is the income tax bill is likely to threaten the government‘s stability in the coming months. One of the coalition parties – TOP 09 – has repeatedly pointed out it would be extremely difficult to implement it by the end of 2011. Finance Minister Miroslav Kalousek, from TOP 09, said if this was the case, invertors in the gambling business might sue the country.
Commentator Erik Best believes that for now, the coalition is off the hook. But the income tax will put the government’s cohesion to a serious test.
“It’s important because it’s linked to a tax bill specifically linked to gambling that is quite controversial. The finance minister, for example, has said that it would not be possible to implement the law by the end of this year, which would be required in this case. So it could end up being another potential large conflict of the same calibre as this one. So we can see either a conflict in mid summer, or in November, when the confidence vote would have to come.”
The coalition is most likely to send the tax bill to the lower house of Parliament in August. The MPs would then have three months to approve it, and by doing so, giving their vote of confidence to the government.
