By Robert Muller
PRAGUE (Reuters) - The Czech center-right cabinet will survive a parliamentary vote of confidence on Wednesday after a group of backbenchers in the ruling center-right Civic Democratic Party gave up a rebellion threatening to bring down Prime Minister Petr Necas.
Necas has been struggling to keep afloat his cabinet, unpopular due to two years of austerity policies and a series of graft scandals, after defections wiped away his three-party coalition's parliamentary majority.
The government's focus on austerity has brought debt costs to an all-time low but also depressed domestic demand in an economy that has been in recession since late 2011, the worst performance in central Europe.
The lower house is due to vote on Wednesday on the cabinet's plan to hike value-added, income and other taxes to cut the budget deficit below 3 percent of gross domestic product next year, a move that sparked a rift in the government camp.
Necas paired the tax vote with a vote of confidence, which means a failure would lead to the cabinet's resignation.
But the dissenting deputies gave up their struggle against Necas on Tuesday, saying two of them would support the tax package while three would leave their parliamentary seats.
"I firmly believe that this conflict has been resolved by this step," Necas told reporters.
The victory will save Necas for now but given his weak position in parliament, the government will struggle to push through legislation and will remain vulnerable to further disloyalty and vetoes from the upper house of parliament, which is controlled by the center-left opposition.
Under the Czech constitution, the three resigning deputies will be replaced by substitutes from the party's list. They could join parliament as soon as Wednesday, which would help Necas win the vote.
Necas needs every vote for the cabinet, which is backed by only 99 seats in the 200-seat lower house, including the rebel faction.
One opposition deputy from the centrist Public Affairs, a party that split from the ruling coalition in the spring, said on Tuesday he would support the cabinet, and the government may also win backing from one or another independents or opposition deputies.
The tax hike, including increase in the value-added tax rates by 1 percentage point to 15 and 21 percent, should bring 22 billion crowns ($1.11 billion) in new revenue next year.
Necas said it should be approved in its original shape, without amendments proposed by the opposition or the rebels.
If approved by the lower house, the tax bill is likely to be sent back by the upper house and possibly by President Vaclav Klaus. To override these vetoes, Necas would need at least 101 votes, sparking a new search for a majority.
(Writing by Jan Lopatka; editing by Michael Roddy)