Czech PM reportedly mulling special taxes for banks, energy and telecoms

By bne IntelliNews November 16, 2016

The Czech prime minister may seek to introduce new taxes on sectors with little competition, local media reported on November 16.

Citing documents compiled by Prime Minister Bohuslav Sobotka’s advisers, press suggested his coalition-leading Social Democratic Party (CSSD) could push to levy special taxes on the bank, energy and telecommunication sectors. However, it is thought that the move may be little more than a populist gesture.

The documents reportedly discuss waging new taxes on the sectors to curb outflows of dividends to foreign owners. Banking and telecoms in particular are in foreign hands. Similar levies have been in place in Hungary since Fidesz came to power in 2010. The populist Polish government introduced a high banking tax earlier this year, and is seeking to wage a levy on large foreign retailers.

Sobotka has sought to mark himself apart from his populist and nationalist peers in Hungary and Poland, who have angered the EU with the introduction of sectoral taxes that aim at foreign - often Eurozone-based - owners. However, the Czech PM is scrambling to revive the fortunes of the CSSD, which has seen support sliding alarmingly just a year or so ahead of elections.

Analysts appear to think there is little to worry about in the latest report. At J&T Bank they suggest “this is only pre-election rhetoric without big support and … the risk of sector tax is minimal”.

Meanwhile, at KBC they note that Sobotka proposed similar measures ahead of the last election, which saw the CSSD crawl over the line just ahead of coalition partner Ano.  

“This was a story before last elections in 2013,” they remember.” Next elections are scheduled for October 2017, so it seems that the current prime minister would like to play the same cards.”

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