Czech PM confident can override vetoes on tax hike, church bill

Reuters News
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Posted: Aug 17, 2012 6:40 AM
Czech PM confident can override vetoes on tax hike, church bill

PRAGUE (Reuters) - The Czech government will secure enough votes to override Senate vetoes of its flagship bills on tax hikes and the return of confiscated church property despite having lost its majority in parliament, the prime minister was quoted as saying on Friday.

Prime Minister Petr Necas's centre-right coalition won elections two years ago on a pledge to cut the budget deficit, but faces a tough task passing legislation in the lower house, where the three ruling parties now hold only half the 200 seats.

With a handful of his own party's MPs having opposed the tax hikes, that means Necas will need the support of some independent lawmakers to overturn the Senate votes.

"I have as many votes as I need," the prime minister was quoted as saying in Friday's Hospodarske Noviny newspaper.

"As long as everyone acts responsibly, then I am certain that my government will push through raising value-added tax, as well as church restitution."

A vote in the lower house could be held when it next meets from September 4.

Necas has said in the past - and repeated in Friday's newspaper interview - that he would have no reason to continue if he could not carry out fiscal consolidation plans which have cut the deficit and the country's borrowing costs but helped push the economy into recession.

The opposition-controlled Senate vetoed on Thursday a bill to hike value-added and income taxes next year, worth 25.5 billion crowns ($1.27 billion), or around 0.7 percent of gross domestic product, needed to help cut the deficit below 3 percent of GDP. [ID:nL6E8JF904]

The vote, which was expected, followed the Senate's rejection on Wednesday of a bill to return billions of dollars in confiscated church property, one of the last disputes dating back to communist times.

Necas told another daily, Lidove Noviny, that backing off the tax hikes "would be a step going beyond the boundary of political and economic silliness, and bordering on ... idiocy".

He said rejecting the tax bill would cost the budget some 18 billion crowns next, year, a lower estimate than the previous calculations.

The Czech economy has contracted in each of the last three quarters as domestic demand suffers from lower government spending and consumers delaying big-ticket purchases.

Many economists have said the government should ease its austerity drive, and the government has said it may need to rethink some plans for the following years due to a weaker economic outlook caused by the euro zone's debt crisis.

Necas said in the interviews the government pays much lower debt costs due to a lower deficit, but that the drop in government consumption and savings measures have helped cause the recession.

"But it is mainly what I would call the lousy economic mood, which is seen in lower household consumption, in the rise in deposits," he said.

($1 = 20.1448 Czech crowns)

(Reporting by Jason Hovet; Editing by Catherine Evans)