Babis might be safeguard against tax growth at FinMin - analysts

Předseda hnutí ANO Andrej Babiš na tiskové konferenci v Praze, kde představil 6. listopadu svou Radu ekonomických poradců.

published: 22.12.2013, 18:39 | updated: 22.12.2013 18:42:16

Prague - Andrej Babis, the chairman of the ANO movement, could act as a safeguard of some sort against possible tax hikes in the Czech Republic as the future new finance minister, David Marek, chief economist of company Patria Finance, has told CTK.

The new finance minister will have the difficult task to attempt to cut the budget deficit while meeting the coalition's goals that will often require increased budget expenditures, according to analysts polled by CTK.

Babis confirmed today that he should be the finance minister and deputy prime minister for economic affairs in the new government.

The centre-left government will have eight representatives of the Social Democrats (CSSD) that won the late-October snap election, six of ANO and three of Christian Democrats (KDU-CSL).

Babis said his priority would be to cut he the budget deficit as well as spending.

"Let us hope that Andrej Babis as the finance minister will be a safeguard against increasing tax burden, which can be evaluated positively. But, of course, the new minister will not be living in a vacuum and will have to respect coalition negotiations, which means that he will not be a hundred percent safeguard," Marek said.

He pointed out that Babis had promised before elections that taxes will not be raised.

However, the coalition agreement shows that expenditures in a number of areas will have to be increased, which means that expenditures in other areas will have to be reduced, Marek said.

"There is a fairly difficult task ahead of the new minister. But it will depend on how ambitious will be the budget goals he will set for himself," Marek said.

"It would be a small ambition to leave the public finance deficit near 3 percent at a moment when the economy is to grow. It would be better if the deficit continued to fall, otherwise we will make the same mistake we had made before the financial crisis," he added.

UniCredit analyst Pavel Sobisek said a cumulation of the posts of the deputy prime minister for economic affairs and the finance minister is unusual in the Czech politics, but has its logic.

"Economic ministers have convincing arguments in the government why to raise state budget spending, while the finance minister has convincing arguments why to rein spending in," Sobisek said.

"Mr. Babis will necessarily feel the responsibility in the joined posts of both the sides, which will perhaps simplify decision-making processes," Sobisek added.



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