PM defends tax hikes

Prime Minister Petr Nečas on Tuesday defended the government’s proposed tax hikes in the Senate. Addressing a meeting of Civic Democrat senators, some of whom strongly oppose the government’s consolidation strategy, the prime minister said the proposed hike in the lower and basic VAT rates to 15 and 21 percent as of 2013 was vital for the government to be able to bring the deficit in public finances under 3 percent of GDP. Mr. Nečas also rejected criticism from President Klaus who said the tax hike was an ill-conceived measure that would undermine the economy. The prime minister countered that it was easy for Mr. Klaus to say when he did not bear responsibility for the state budget. Several Civic Democrat senators said later the prime minister’s arguments had failed to convince them to support the government’s austerity package.