Parties begin outlining tax plans ahead of election year

The ruling Civic Democrats have, for the first time since forming the current coalition, begun to change tack on austerity. The once dominant right-of-centre party, which has taken a hammering in opinion polls, wants to lower taxes for employed pensioners as well as offer new tax write-offs for companies. The plan, however, puts the party at odds with coalition members TOP 09, in charge of the Finance Ministry.

Photo: Barbora Němcová, Radio Prague International

After two years of austerity measures, the centre-right Civic Democrats have done an about face, planning tax relief worth some 2,000 crowns for the country’s roughly 100,000 working pensioners. The government raised their ire several months ago, scratching existing tax relief. In response, many made use of a loophole, suspending employment for one day to file more favourable taxes. Many were left bitter.

“As pensioners we try to work and help the state in different ways. This, I think, is a dirty trick.”

Now the Civic Democrats appear to have backtracked, suggesting that toughening conditions for employed pensioners was a mistake. Trade & Industry Minister Martin Kuba:

Martin Kuba, photo: Filip Jandourek

“For us in the Civic Democratic Party it did not seem like the most fortunate of [decisions]. We agreed to it in negotiations on the austerity package with our coalition partners.”

But TOP 09 deputy leader and Finance Minister Miroslav Kalousek is having none of it, seeing poll numbers behind the announcement. It is lost on no one that poll after opinion poll has shown the Civic Democrats plummeting to last or near last place in the Chamber of Deputies - if elections were held today. Finance Minister Kalousek:

“I refuse to go back and forth on the issue only because the Civic Democrats are nervous about their popularity in opinion polls.”

That said, it is already clear the Civ Dems will find fertile ground for their proposal among the Leftist opposition, at the risk of antagonising their partners in government. Social Democrat leader Bohuslav Sobotka has already indicated members of his party would back any relief for employed pensioners and it is just as likely the proposal will get backing from the Communists.

Miroslav Kalousek, photo: Filip Jandourek

The Civic Democrats also don’t want to stop there but to push for favourable tax-write offs for firms investing in or upgrading, for example, new production technology. Machinery bought could be written off faster, significantly helping firms – changes the party would like to see in place by the beginning of 2014. In anticipation of next year’s elections, the Social Democrats have already made clear one of their main incentives: to significantly hike taxes to 38 percent for anyone making over 100,000 a month (roughly four times the national monthly average). The Communist Party would go still further, raising individual taxes to 40 percent for anyone making 83,000 or more per month.