PM prepared to stake government’s future on tax hikes

Prime Minister Petr Necas said on Tuesday he was prepared to stake his government's future on winning parliamentary approval for controversial tax hikes aimed at reducing the gap in public spending. The proposed bill includes a 1 percent hike in the lower and basic VAT rates to 15 and 21 percent respectively in 2013 and a “solidarity tax for the rich” pertaining to people earning more than 100,000 crowns a month for a period of three years. The bill, earlier rejected by the Senate, has divided the lower house with some members of the prime minister’s own Civic Democrats refusing to support it on the grounds that it would strangle the economy. The governing coalition which now has 100 deputies in the lower house would need to muster 101 votes to overturn the Senate’s veto. However six Civic Democrat deputies have indicated they will not support the bill.

At a meeting of his party’s deputies club on Tuesday Prime Minister Petr Nečas said he was prepared to link the fate of the government to the said bill in a repeat vote should it be rejected. He said the ruling coalition would have no reason to remain in office if it were unable to fulfill its primary goal –fulfilling its fiscal consolidation plan.