President Klaus signs government VAT hike into law

President Václav Klaus on Friday signed into law government legislation that raises the two VAT rates by one percentage point to 15 and 21 percent, respectively. The legislation comes into force on January 1. The package also includes a seven-percent hike in income tax for high earners and cancels tax brakes for economically active retired people. The Czech government based the state budget for 2013 on revenues from the tax hikes; Mr Klaus signed it into law despite his objections; earlier this year he said raising taxes at a time of recession was an “economic suicide”. Analysts estimate that on average, the hikes will cost Czech families around 1,000 crowns each year.