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Tuesday, 23 October 2012 - Time running out for Czech prime minister to save government |
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      Edition: U.S. Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Home Business Business Home Economy Technology Media Small Business Legal Deals Earnings Social Pulse Business Video The Freeland File Aerospace & Defense Investing Simplified Markets Markets Home U.S. Markets European Markets Asian Markets Global Market Data Indices M&A Stocks Bonds Currencies Commodities Futures Funds peHUB World World Home U.S. Brazil China Euro Zone Japan Mexico Russia India Insight World Video Reuters Investigates Decoder Politics Politics Home Election 2012 Campaign Polling Supreme Court Politics Video Tech Technology Home MediaFile Science Tech Video Tech Tonic Social Pulse Opinion Opinion Home Chrystia Freeland John Lloyd Felix Salmon Jack Shafer David Rohde Nader Mousavizadeh Lucy P. 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Credit: Reuters/David W Cerny PRAGUE | Mon Oct 22, 2012 7:47pm EDT PRAGUE (Reuters) - Czech Prime Minister Petr Necas will on Tuesday make possibly his last attempt to win the support of a rebellious party faction that is threatening to bring down his cabinet over a plan to hike taxes. The Czech Republic has maintained investor confidence thanks to a relatively low debt load, but the center-right government is teetering on the brink of collapse, weakened by dissenters, austerity measures, graft scandals, and heavy losses in regional and upper house elections in the past two weeks. The rebellious faction of about six backbenchers in Necas's Civic Democratic Party has been refusing the government's plan to hike the value-added and income taxes, which Necas says is necessary to cut the budget deficit to 2.9 percent of gross domestic product next year from 3.2 percent expected this year. At 8 am (0600 GMT), a working group of Necas's' backers and the rebels will try to hammer out a compromise, ahead of a parliamentary session that starts later on Tuesday and should debate the tax bill, with the final vote possible as soon as Friday. In an attempt to force the rebels back into line, Necas tied the vote with a confidence motion in his cabinet. The rebels, whose votes Necas needs to secure a majority, have so far not blinked, saying tax hikes would anger voters. "Moving away from our agenda, not keeping our word leads to shameful election results and now the issue is not just the tax package but the future of the right in this country," one of the dissenters, Petr Tluchor, said on Monday. The mood in the party has been souring in recent weeks as the rebel group showed no signs of being ready to compromise, party officials said, speaking on the condition of anonymity. Party leaders have questioned whether the real motivation, rather than the tax laws that the rebels had backed in previous votes, was to remove Necas as prime minister or the party chief at a congress on November 2-4. Necas may try to move the final vote on the tax bill, raising value-added tax rates by 1 percentage point to 15 and 21 percent next year and slapping higher taxes on top earners, until after the congress where he hopes to defend his post. An opinion poll showed on Monday support for the ruling party has dropped to 16.5 percent, its worst in 15 years. If the government falls, parliament may agree to call an early election. Alternatively, parties may try to forge a new coalition, but Necas as well as his coalition partner, the conservative TOP09, and the center-left opposition have all insisted on an election if Necas loses the confidence motion. Center-left opposition leader Bohuslav Sobotka, whose Social Democrats lead opinion polls by a wide margin, told Reuters in an interview that an election could take place in early 2013. His party's policies include hiking taxes for corporations and top earners, raising the overall tax intake by about 3 percent of gross domestic product from the current 34.7 percent. (Additional reporting by Robert Muller; Editing by Jon Hemming) World Investing Simplified Tweet this Link this Share this Digg this Email Reprints   We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.   Edition: U.S. Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Back to top Reuters.com Business Markets World Politics Technology Opinion Money Pictures Videos Site Index Legal Bankruptcy Law California Legal New York Legal Securities Law Support & Contact Support Corrections Connect with Reuters Twitter   Facebook   LinkedIn   RSS   Podcast   Newsletters   Mobile About Privacy Policy Terms of Use AdChoices Copyright Our Flagship financial information platform incorporating Reuters Insider An ultra-low latency infrastructure for electronic trading and data distribution A connected approach to governance, risk and compliance Our next generation legal research platform Our global tax workstation Thomsonreuters.com About Thomson Reuters Investor Relations Careers Contact Us   Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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