Czech CSSD vows to hike taxes for big firms when it comes to power.

By bne IntelliNews March 18, 2013
Czech Social Democrats (CSSD), the major opposition party and most likely the winner in the next general elections in mid-2014, vowed to hike the corporate tax from 19% to 21% and slap a 30% levy for big financial, energy and telecommunication firms when it comes to power, CTK news agency reported citing CSSD shadow finance minister Jan Mladek as saying at the party's two-day congress over the weekend. CSSD also plans to scrap the flat income tax currently at 15% and introduce a progressive income tax with the upper rate of 38%. It also considers imposing a 7% solidarity tax. Bohuslav Sobotka, who was re-elected CSSD chairman at the congress, said his government would not reduce the VAT. The current centre-right government of Petr Necas raised both VAT rates by 1pp to 15% and 21% respectively as of January 1, 2013. In an interview for Reuters Sobotka said that his goal will be not only to keep the budget gap below the EU's limit of 3% of GDP but also to support the creation of new jobs with the unemployment rising to record-highs in February. According to the latest data from the labour ministry, the jobless rate in the country of 10.6mn people rose to an all-time-high of 8.1% in February. Sobotka also said that his government would abolish the second pension pillar introduced by Necas government this year enabling workers to transfer 3pps of their mandatory pension insurance payments to private funds. Necas' government introduced painful spending cuts and raised taxes to achieve its target of narrowing the budget deficit to 2.9% of GDP in 2013. But the rigid austerity hurt the economy that probably entered its fifth straight quarter of contraction at the beginning of 2013 and cost the government its popularity and its parliamentary majority. CSSD has been the clear leader in opinion polls and now the question is not whether it will win the 2014 elections but whether it will form a one-party government or rule in coalition. Czech media have been speculating for some months now that CSSD would be forming a coalition with the Communists (KSCM) but such a deal seems unlikely after at this weekend's congress CSSD refused to cancel the party's resolution from 1995 that bans it from cooperating with KSCM.

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