Czech government faces collapse over austerity

AP News
Posted: Oct 23, 2012 7:54 AM
Czech government faces collapse over austerity

PRAGUE (AP) — The Czech Republic's government edged closer toward collapse after the conservative party of Prime Minister Petr Necas failed to reach a deal with lawmakers over unpopular austerity measures.

In September, Parliament rejected a 1 percent increase in the sales tax on retail goods and a 7 percent income tax increase for the highest-earners. Six lawmakers from Necas' party voted against the measures, saying they are against their party's values.

Necas resubmitted the measures, linking their passage to a vote of confidence in the government. If the vote, which could be held this or next week, also fails, the coalition government will fall.

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Necas said Tuesday talks with the rebel lawmakers failed but are set to continue.

The measures aim to bring the budget deficit below 3 percent of GDP.