Prague - The Czech government approved its key tax reform proposal even without the ministers from the conservative TOP 09, the second largest party of the three-member coalition.
All representatives of the Civic Democratic Party (ODS), the leader of the center-right coalition, and Public Affairs, the coalition's centrist junior member, voted in favor of the reform.
The TOP 09 ministers absented from the government meeting. PM Petr Nečas (ODS) called their absence "inexcusable".
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The TOP 09 ministers boycotted the meeting in a protest against the offensive statements of Ladislav Bátora, a civil servant at the Czech Education Ministry, against Minister of Foreign Affairs Karel Schwarzenberg from TOP 09.
Bátory is accused by his opponents of having an extreme right-wing background.
According to Finance Minister Miroslav Kalousek, the main purpose of the reform is to make the tax system simpler and thus decrease the administrative costs for citizens, companies, and the state.
The new tax reform package includes investment incentives, although it was originally planned to scrap them. Jaroslav Hanák, the director of the Industry and Transport Union welcomed the decision to preserve investment incentives, calling it "our most important concern" and a crucial issue for the competitiveness of the Czech Republic.
"If we didn't have these incentives, it would be a catastrophe," said Hanák in an interview with the public-service Czech Television.
Also, for the first time in the Czech history, revenues from gambling, lotteries, and gaming activities will be taxed. Companies that operate these gambling activities will have to pay to the state one fifth of the difference between what they earn from players and what they pay them in winnings.
Radek John, the chairman of Public Affairs, estimates that the treasury will earn as much as CZK 7bil (EUR 285mil) thanks to the new tax which should come in effect in 2012.
According to a survey conducted in July 2011 by Ipsos Tambor, 87 percent of Czechs support the decision to tax hazard.
If the package is approved by the parliament, most of the changes will come into effect at the beginning of 2013.
