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Gov't bets the bank on reforms

Topolánek calls new finance policies key to maintaining coalition

By Hilda Hoy
Staff Writer, The Prague Post
April 11th, 2007 issue

The fragile 3-month-old government’s first attempt to pass sweeping legislative reforms could threaten to dissolve the shaky coalition and lead to early elections this fall, Prime Minister Mirek Topolánek has said.

The ambitious proposal for reducing spending and cutting the national debt was officially presented April 3. Plans include tax reforms, benefit cuts and revamped social and labor policies.
From the start, there has been dissent in the ranks against the proposal.
Vlastimil Tlustý, a deputy of the leading Civic Democrats (ODS) and short-lived finance minister in a coalition that failed to win confidence last fall, has been the most outspoken critic. The plans are too far removed from the ODS platform, he said. “If the mistakes fail to be removed … I cannot sign this,” he told the Czech News Agency April 8.
Further voices of dissent have been raised throughout the coalition. Some said they would vote against the plan; others said they hoped to introduce changes to it.
In an interview with daily Mladá fronta Dnes April 7, Topolánek, ODS chairman, admitted the failure of the proposal would be tantamount to the failure of the government.
“We promised to implement reforms. Otherwise the government has no right to continue,” he said.
The support of every deputy will count. The ruling coalition, which partners the ODS with the Christian Democratic Union (KDU-ČSL) and Green Party (SZ), holds exactly half of the government’s 200 seats.
At stake are a flat 15 percent income tax, a lowered corporate tax, revisions of tax deductions and broad cuts to social benefits. Birth allowances are to be cut, parental leave shortened, sickness benefits tightened, government and political salaries frozen for two years, and value-added tax (VAT) raised from 5 percent to 9 percent on certain goods and services.
If early elections are called, the political turmoil could continue: A Median agency poll released April 5 found the popularity gap between the ODS and the opposition ČSSD narrowing in March.

Hilda Hoy can be reached at hhoy@praguepost.com


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