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Finance reform bill gains ground

Civic Democrats reach agreement ahead of key vote in Chamber

By Markéta Hulpachová
Staff Writer, The Prague Post
August 22nd, 2007 issue

The Chamber of Deputies voted Aug. 21 on the third and final reading of the public finance reform bill, which proposes sweeping changes to tax structures.
At press time, the Civic Democratic (ODS)-led government coalition expected the bill to pass by a narrow margin of 102 to 100.
One day before the final vote, the ODS appeased its rebels, deputies Vladimír Tlustý and his supporters, who opposed the draft version approved by the ODS Aug. 14.
Tlustý and his supporters have argued the bill would dramatically increase the tax burden for the middle classes in the next two years.
After a two-hour meeting, Tlustý reached a compromise with Prime Minister Mirek Topolánek Aug. 20, agreeing to support the current draft bill in exchange for Topolánek’s promise to amend the income tax clause in 2008.
“In the first half of 2008, the coalition will submit an amendment to the law on income tax that will solve the problem between the years 2008 and 2009,” Topolánek told the Czech News Agency Aug. 20.
Deputies began discussing the bill’s second and third reading Aug. 14. To push the bill past the opposition of the Social Democrats and the Communist Party of Bohemia and Moravia, the ODS, Green Party and Christian Democratic 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.
While confident it will secure the votes of Melčák and Pohanka, the ODS, at press time, still lacked the support of Christian Democrat Ludvík Hovorka, who has proposed a more gradual overall tax increase.
The Cabinet first approved the package of tax and social reforms in April as an initial step toward lowering the state budget deficit.
The bill is widely criticized by the opposition, which claims its shifts the financial burden from high-income to lower-income tax brackets.
“The manner in which the government coalition prepared the reforms indicates an unacceptable arrogance toward the people and their future,” said Social Democratic senators club chairwoman Alena Gajdůšková.
If approved by the lower house, the bill will be discussed in the Senate in September and is subject to executive approval before being signed into law.
The changes would go into effect Jan. 1, 2008.

Markéta Hulpachová can be reached at mhulpachova@praguepost.com


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