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Czech report Czech report
by Euro Reporter
2012-09-07 10:00:31
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PM under threat after failed vote to hike taxes

The lower house of the Czech parliament rejected on Wednesday the centre-right government's plan to raise sales and income taxes, threatening the fate of Prime Minister Petr Necas who insists the hikes are necessary to cut the budget deficit. Necas has pushed through several rounds of austerity measures even as the central European country's economy dropped into recession last year, and plans to put the failed tax bill to another vote which will be tied to a confidence motion. The plan fell through in the lower house on Wednesday by a 94-101 vote after Necas lost the support of a handful of his own lawmakers who said the latest tax hikes go against the grit of right-wing policies. Necas said he was open to discussions with the rebels but he saw little room for changes, and said he was confident the original bill would go through.

"This is the first time we were not able to push through a government proposal. I firmly believe responsibility will prevail and this was a unique occurrence," he told reporters. "The government's key task is consolidation of public sector finances, everything is subordinate to that and I as prime minister do not mean to give in on that." The two-year-old government plans to immediately resubmit the bill, proposing a 1 billion-1.4 billion euro ($1.26 billion-$1.76 billion) per-year hike in value-added, personal income and other taxes. The government plans to narrow the budget gap to 2.9 percent of gross domestic product next year from an expected 3.1 percent in 2012. The tax hikes next year are worth 0.7 percent of GDP.

Necas, a political veteran and plasma physicist by training, won a 2010 election after warning Czechs they could go the way of Greece if they failed to tighten their belts. He has won plaudits from investors and presided over record low debt costs. But his policies have also driven consumer confidence among the traditionally thrifty Czechs to its lowest levels in more than a decade, extending the recession. Gross domestic product dropped by 1.2 percent year-on-year in the second quarter, lagging growth in neighbours like Poland and Slovakia. Regardless of the fight over taxes, the lower house approved on Wednesday a plan to slow down the growth in pensions in the next three years, another austerity measure.

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Aliyev’s decision might be seen as dangerous misuse of judicial proceedings

Mr Milan Cabrnoch, Chairman of the European Parliament Delegation to the EU-Armenia, has issued the following statement on the case of Ramil Safarov:

“In my capacity as Chairman of the European Parliament Delegation to the EU-Armenia, EU-Azerbaijan and EU-Georgia Parliamentary Cooperation Committees, I express my deep concern about the Azerbaijani President's decision to pardon Ramil Safarov, who was supposed to serve a life sentence for brutally murdering Gurgen Margaryan, an Armenian military officer, in Hungary in 2004. For a number of years, the Members of our Delegation have redoubled their efforts in order to contribute to the improvement of relations between Armenia and Azerbaijan through the parliamentary dialogue and, most recently, also through the Euronest PA. Moreover, we have intensified the bilateral contacts with Armenia and Azerbaijan, by making use of the instruments of parliamentary diplomacy, in the hope to reduce regional tensions, promote reconciliation and contribute to finding a viable solution to the Nagorno-Karabakh conflict.

Our Delegation has made it clear to its Armenian and Azerbaijani counterparts that respect for human rights, the rule of law and European values should always be at the heart of their European integration aspirations. In this context, the decision ofMr Aliyev might be seen as a dangerous misuse of judicial proceedings. I urge the authorities of Azerbaijan to show their commitment to the values I mentioned and strongly encourage Azerbaijan and Armenia to remain engaged in a reconciliation process.”

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Czech government fights for austerity

The Czech government is re-submitting unpopular austerity measures designed to help bring the country's budget deficit below 3 percent of GDP. The lower house on Wednesday rejected a 1 percent increase in the sales tax on retail goods and a 7 percent income tax increase for the highest-earners.

The parliamentary refusal came after six lawmakers from the conservative Civic Democratic Party of Prime Minister Petr Necas voted against because they said the tax hikes are against their party's values.

Necas said Thursday a new vote should take place in three months and the government is linking it to a confidence vote. If that vote also fails, the coalition government will fall. The government wants to reduce the deficit to retain the confidence of the markets.



       
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