Trade unions, employers, cabinet disagree on reforms

02-05-2007

Representatives of the Czech government, trade unions and employers have not reached agreement on the planned government reform of the tax and welfare systems. At an extraordinary tripartite meeting on Wednesday, the trade unions rejected the government proposal, arguing that the prepared changes would badly affect the situation of people with low and mid-level incomes and would reduce the budget revenues. The employers welcomed the reform steps but voiced a number of reservations. In order to reduce the country's fiscal deficit, the Civic Democrat-led cabinet intends to introduce a 15-percent tax on personal income and cut corporate tax from 24 to 19 percent. The basic five-percent VAT imposed on food, drugs and some services is to be raised to nine percent. The package will be submitted to the lower house in June. A vote should take place at an extraordinary session during the summer recess.