Czech Social Democrats agree deal to form ruling coalition.

By bne IntelliNews December 11, 2013

The leftist Social Democratic Party (CSSD) that won the Czech October general elections has reached a deal to form a ruling coalition with anti-corruption movement ANO that ranked second in the elections and the Christian Democrats (KDU-CSL), CTK news agency reported citing CSSD’s leader Bohuslav Sobotka as saying.

The three parties control 111 mandates in the 200-seat lower house. The main point of difference among them was tax policy as CSSD was seeking to raise taxes for big companies and high earners to finance state spending aimed at kick-starting the economy that is emerging from a record-long recession, while pro-business ANO and KDU-CSL were against tax hikes. To reach the coalition deal, the three parties agreed to leave taxes on companies and high earners unchanged in 2014, Sobotka said adding that tax changes could come in 2015. Regarding CSSD’s plans to slap a special tax on banks, telecommunication companies and utilities, Sobotka said the issue was addressed in the coalition talks but gave no further details.

Sobotka, who will likely be the next prime minister, is expected to present his government to President Milos Zeman by the end of the year. The deal, if approved by Zeman, will end a political stalemate that has crippled policy making since June when the former centre-right government collapsed amid a bribery and spying scandal.

The new government’s main priority will be the introduction of measures aimed at helping the economy return to growth after a record-long recession mainly due to the austerity agenda of the former centre-right government.

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