Parties reach deal on centre-left coalition government

Three Czech parties have struck a deal on forming a coalition government. The Social Democrats, ANO and the Christian Democrats have finalized agreement on the next cabinet’s policies. The parties said the agreement would be signed and made public before the end of the week before they tackle the final part of the deal – distributing government portfolios, and nominating future ministers.

Bohuslav Sobotka, photo: CTK

After more than five hours of negotiations, Social Democrat chair Bohuslav Sobotka told reporters in the early hours of Wednesday that the three parties of the emerging coalition had cleared all the remaining controversial areas, and finalized a deal on the future government’s key policies. Mr Sobotka said the agreement would be made public after it is signed by party leaders.

“Today, we reached a final deal as we have cleared all the disputed points we had. We will meet again on Thursday to make sure the compromises we have agreed on are properly incorporated in the text of the agreement. After that, I expect the text will be signed by representatives of the three parties. We have also agreed we will release the coalition agreement, most probably on Friday.”

The Social Democrats, who came first in October’s elections, ran with a promise to increase corporate taxes and to introduce progressive income tax. The plan however met with strong opposition from ANO, a party run by agriculture and chemistry tycoon Andrej Babiš. The parties eventually settled on a compromise: any tax hikes can only come in 2015. Jaroslav Faltýnek is the head of ANO’s group of deputies.

Jaroslav Faltýnek, photo: CTK

“It’s important for us to have reached a deal with our partners that we will not increase corporate taxes, and will not introduce progressive tax that would be higher than it is today. As far as other taxes are concerned, let’s wait for the exact wording that will be included in the coalition agreement.”

The third party in the likely future coalition, the Christian Democrats, welcomed their partners’ willingness to consider joint taxation of married couples. The Christian Democrats also push for changes to the pension system which should favour people with more children, and some other issues.

The leaders of the three parties on Wednesday did not specify other details of the agreement. But according to some media reports, the coalition is considering introducing a bank tax, and plans to lower the VAT rate on medicine, books, and other goods. They have also agreed to cancel fees for visiting the doctor and for prescriptions while retaining a charge for visiting accident and emergency.

The Social Democrats, ANO and Christian Democrats had earlier agreed to boost the growth of pensions, and abolish some features of the pension system introduced by the previous government, namely its so-called second pillar.

Miloš Zeman, photo: CTK

After the coalition agreement is signed, the final round of negotiations will address the issue of how the individual ministries will be distributed, and who will be nominated to run them. The Social Democrats have reportedly proposed eight portfolios for themselves, seven for ANO and two for the Christian Democrats, who are far from happy with the proposal. The coalition will also have to deal with President Miloš Zeman who’s made it clear he will want to have a final say on the line-up of the government.