Czech government approves draft 2013 state budget

The projected deficit requires, however, the passing of a package of tax changes, including higher VAT rates.

The government must submit the draft budget to the Chamber of Deputies by end-September.

However, six deputies for the Civic Democratic Party (ODS, senior coalition government member) are opposed to the package. As a result, a working group was formed inside Prime Minister Petr Necas's party that is to resolve the dispute.

Nevertheless, the tax package was not sent to the second round of the debate in the Chamber of Deputies last week.

The tripartite meeting of the government, trade unions and employers did not agree on the budget bill on Monday either.

The trade unions rejected it, arguing that the financial risks of the proposed budget amount to 45 to 60 billion crowns, including the basic parameters as well as the VAT revenue and the pension reform launch.

The unions also say the budget reckons with legislation that has not yet been passed.

Employers' representatives have also voiced some reservations about the planned budget.

The government reckons with a deficit of 100 billion crowns, or 3 percent of GDP, provided that the tax package is passed. The budget expenditure is to reach 1,185 billion and revenues 1,085 billion crowns.

This year, the revenues were planned to reach almost 1,190 billion crowns.

Under the bill, teachers' salaries are to grow by on average 1 percent.

The state is to spend over 394 billion crowns on pensions, which is 12 billion more than this year.

The state plans to spend 11.3 billion crowns on unemployment benefits, while this year, it expects 9.2 billion to be spent on the purpose.

The government's expects the average unemployment rate is to increase by 0.1 percent to 8.6 percent next year.

In all, 503 billion crowns are to be spent on welfare benefits next year, which is 18 billion more than the expected sum this year.

The Chamber of Deputies is to pass the budget bill for next year by December 12.

Necas has warned that the dispute over the future VAT rate is threatening to cause a stopgap budget.

($1 = 19.452 crowns)

Author: ČTK
www.ctk.cz