New coalition kicks the can down the road on taxes
13. 12. 2013 12:16
Emerging government coalition in Czech Republic has reached official agreement on policy, but postponed decision on key tax issues
ANO 2011 leader Andrej Babis (left) and CSSD chairman Bohuslav Sobotka
ANO 2011 leader Andrej Babis (left) and CSSD chairman Bohuslav Sobotka | Foto: ČTK

UPDATE: A month and a half since the late-October general election, three potential coalition parties have reached a formal agreement on policy for the next four years. Nonetheless, the talks were reportedly very complicated and the decision on key tax issues has been postponed.

For example, the election-ruling Social Democrats (CSSD) originally proposed a special "sector tax" for banks and a minimum tax for self-employed people, but these measures were eventually excluded from the agreement due to the opposition of the other two coalition partners, billionaire Andrej Babis's ANO 2011 and the Christian Democrats (KDU-CSL).

The agreement says that there will be no tax hikes in 2014, as proposed by ANO 2011. However, it is not clear how the new coalition plans to finance increased government expenditures.  

The original December 4 story is below:

Prague - Ongoing talks on a new coalition government have been hampered not only by the inability of three possible coalition parties -- CSSD, ANO 2011 and KDU-CSL -- to agree on taxes, but more recently also by President Milos Zeman.

Daily newspaper Pravo wrote that election-winning Social Democrat (CSSD) chairman Bohuslav Sobotka plans to nominate his close ally Lubomir Zaoralek for foreign minister, but Zeman will refuse to appoint him.

A source close to Zeman told Pravo that the president is co-creating Czech foreign policy and he cannot imagine to cooperate on this with Zaoralek. "He will never appoint him," the source told Pravo.

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In what appeared to be an an attempt to preempt this scenario, Sobotka said last week that the president would need to have a very serious reason for not appointing a candidate for a minister.

Both Sobotka and Zaoralek are considered leaders of the anti-Zeman camp inside the CSSD.

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If Zeman refuses to approve Zaoralek as foreign minister, Sobotka will have to appoint Zaoralek as state secretary for the EU at the Government Office, a civil service post. Zeman has no means to block this appointment.

KDU-CSL chairman in USA

Amid these developments, Christian Democrat (KDU-CSL) chairman Pavel Belobradek left for a two-week International Visitor Leadership Program internship in the USA. Belobradek will spend seven days in Washington, one day in Philadelphia and four days in New York. He was invited as a private citizen by the US Department of State this January.

In the past years, hundreds of Czech nationals have visited the USA as part of this program.

In the October early election, the KDU-CSL won 14 seats in the 200-member lower chamber and is one of the three possible coalition parties.

"He will meet with various civil servants and representatives of non-for-profit organizations, museums and cultural institutions," said US embassy in Prague spokesman Daniel Ernst. Belobradek will discuss various topics with these officials, including nuclear energy and the integration of Muslims.

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