In Business News: a major investigation reaching into the upper echelons of government will not negatively impact markets say analysts; the Agriculture Ministry revises the damage figure to the sector from recent floods; the Czech Republic moves up seven notches on KPMG’s VAT list; Czech companies could provide amphibious vehicles for Libya, E15 reports; the TOP 100 association releases its list of top Czech exporters last year.
The government has set aside an additional 557 million crowns for flood relief, bringing the total amount pledged to deal with damage in areas and ensuing clean-up operations to 7.3 billion. Insurance companies have registered 30,000 insurance claims amounting to almost four billion crowns to date; the agriculture sector, meanwhile, suffered damages of more than 3.5 billion in the recent floods which hit a number of regions in Bohemia.
The Czech Republic has moved up by seven notches to 14th place in KPMG’s global chart of VAT rates. This is due to an increase in the basic VAT rate to 21 percent in January of this year, while the average global basic VAT rate is 15.55 percent. The European average VAT rate is 20.5 percent. The tax burden on Czechs is thus higher than the global, as well as European average.
Regions in the Czech Republic recently hit by floods have begun tabulating the damage costs. So far, damage to infrastructure and property across 25 municipalities in Plzeň has been estimated at 47.9 million crowns. The figure, however, is preliminary and appears likely to go up. Municipalities have also begun filing for financial relief so far counting 3.7 million. Beroun, not far from the capital, has been tabulating the damage to roads and bike paths, so far estimated at 30 million crowns. The overall figure for total damages there, however, is expected to increase considerably: between 200 and 300 million. Fifty million crowns, meanwhile, is being drawn by the region of Ústí in north Bohemia to be used for clean-up operations and repairs. The figure is not final: the regional governor pointed out it was around a ‘seventh’ of total funds which will be required.
In related news, local employment bureaux have issued approximately 1,280 relief payments to families in areas struck by floods; hundreds of unemployed people also volunteered to help in clean up operations. The news was revealed on Wednesday by the spokesman for the central employment office Jiří Reichl. People whose property was lost or badly damaged in the recent floods can apply for immediate help of up to 51,150 crowns. The spokesman noted that a number of towns and villages had signed agreements with employment bureaux covering publically-beneficial work.
The state-owned power utility CEZ is to waive three monthly bills for households hit by over half a metre of flooding, its director, Daniel Beneš, said on Tuesday. Homes where flood waters were less than half a metre will not be charged for one month’s power, he said. The prime minister, Petr Nečas, described the gesture as a sign of social responsibility and called on other power suppliers to make a similar gesture.
Flood-relate damages to the agriculture sector are estimated to be at least 1.8 billion crowns, according to the Czech Agrarian Chamber. The overall figure could be much higher since the estimate does not include losses to the fishing industry. In 2002, farmers around the Czech Republic suffered damages of more than 3.5 billion crowns. Some 55 thousand hectares of land were flooded in the past week, which most of all affecting vegetable growers. Many farmers were getting ready to harvest many of their crops, which are now effectively destroyed. This will most likely cause prices of local produce to rise this year.
The minister of finance, Miroslav Kalousek, has admitted to being drunk in interviews to broadcast media outlets on Thursday, the news site iDnes.cz reported. Mr. Kalousek slurred his words and struggled to speak coherently in interviews for Czech Radio and TV Nova on the subject of tax reliefs for flooded businesses. Speaking on Friday, the minister said he had had two shots of spirits and, as he was tired, they had affected him more than he had expected. He apologised and said he would not offer excuses similar to those produced by other politicians in the past.
In Business News this week: flood damages estimated between 10 and 20 billion; insurers to pay over 7.5 billion in flood compensation; government to offer tax breaks to inundated businesses; Czech economy in deep recession while household spending up; and car sales down by 13 percent between January and May.
Prime Minister Petr Nečas announced on Wednesday that the government will increase the emergency budget for post-flooding transportation infrastructure repairs by two billion crowns. The government had already released 1.3 billion crowns from the infrastructure fund on Monday. As a result of flooding, fallen trees and landslides, 93 roads and around seven railroads in Bohemia are still closed. No estimates have been released for total damages to transportation infrastructure.
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