Vondra: exceeding planned budget deficit could bring down government

Defence Minister Alexandr Vondra said Sunday that exceeding the planned budget deficit could bring about the fall of the government. In a debate on Czech Television, Mr Vondra said that the leading Civic Democrat and TOP 09 are not considering raising corporate tax, as has been demanded by the opposition and the junior coalition party Public Affairs. A one-percent increase in the corporate tax would bring some 7 billion crowns to the state coffers, though not immediately. Only an increase in VAT would have an immediate effect, Mr Vondra pointed out. Tax revenues have been rising year-on-year, but less than the Finance Ministry has planned. The 2011 budget deficit is set at 135 billion crowns. The coalition has agreed on a VAT increase from 10 to 14 percent in 2012. As of 2013, the two VAT rates (14 and 20 percent) are to unify at 17.5 percent.