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Coalition set to finalize reforms

Deputies expected to vote on bill's third and final reading next week

By Markéta Hulpachová
Staff Writer, The Prague Post
August 15th, 2007 issue

The Civic Democrats (ODS) reached an agreement on changes to the public finance reform bill needed to stabilize the state deficit hours before it went to a second reading in the Chamber of Deputies Aug. 14.
The ODS acknowledged that further changes to the reforms would have to be made later in the day to gain the unanimous vote of its governing coalition, which includes the Christian Democrats and the Green Party.
While willing to compromise with rebel ODS Deputy Vlastimil Tlustý, who advocates postponing the bill’s 4 percent value-added tax hike to 2009, the ODS is unlikely to appease Christian Democrat Ludvík Hovorka, who wants to lower the corporate tax to only 22 percent. He also opposes certain doctor fees and proposes a more gradual overall tax hike, Prime Minister Mirek Topolánek told the Czech News Agency before the lower house’s session.
To push the bill past the opposition of the Social Democrats and the Communist Party of Bohemia and Moravia, the governing coalition requires the votes of all its 100 members as well as support from two independents, former Social Democrats Miloš Melčák and Michal Pohanka.
Deputies are expected to vote on the bill’s third and final reading during the week of Aug. 20. (The first reading passed through the Chamber of Deputies in June.) If approved by the lower house, the bill is subject to Senate and executive approval before being signed into law.
The Cabinet first proposed the package of tax and social reforms in April as an initial step toward lowering the budget deficit. Since its proposal, the bill has been a focal point for the government, which has been gridlocked on several of the bill’s basic provisions.
Despite the disagreements, Topolánek remains confident the bill will pass.
“Everyone looked at this package of reforms as if it were the Holy Grail,” he told the daily newspaper Mladá fronta Dnes Aug. 13. “It’s only one out of 10 items on the government’s reform agenda. Social, healthcare and pension reforms await us after we stabilize public finances.”
Because the ODS has based its platform around the reforms, a failure to pass the bill would signify the ineffectiveness of the government’s majority coalition.
“If we’re not able to pass this reform package, the government will have no purpose. I think we will have to have a new election,” Topolánek said.
The bill is widely criticized by members of the opposition.
“It’s a package of problems,” said Milan Štěch, president of the country’s largest labor union confederation, ČMKOS. The bill does nothing to improve the state budget because it shifts the tax burden from higher-income to low-income brackets, he added.

Markéta Hulpachová can be reached at mhulpachova@praguepost.com


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