Czech lawmakers reject proposal cutting excise duty on fuels


25.07.2014 15:02

Prague - The Czech Chamber of Deputies today rejected the proposal of Social Democratic (CSSD) deputy Milan Urban to cut excise duty on petrol and diesel oil, approved earlier this week, and approved tax refunds on diesel oil for farmers.


Schůze Poslanecké sněmovny, hlasování - ilustrační foto. ČTK Kamaryt Michal

Deputies had to vote on the cut in excise duty again today because they approved it on Wednesday, but later revoked the vote.

The cut in fuel excise duty would strip the state budget of Kc14bn.

Opposition deputies for Civic Democrats (ODS), TOP 09 and Usvit left the chamber before the final voting in a protest against the repeated vote.

Urban's proposal was supported by 26 Communist (KSCM) deputies today. From CSSD deputies, only Urban voted for the proposal.

The bill as a whole was supported by deputies from the government coalition and by Communists.

The government sponsored amendment to the law on excise duties was originally meant only to maintain farmers' right to a refund of part of excise duty on diesel oil they use.

But Urban submitted a rider to the bill during its second reading cutting excise tax on diesel by Kc2.50 a litre a excise tax on petrol by Kc1.50.

Deputies approved the proposal on Wednesday when opposition deputies and 17 CSSD deputies voted for it.

The vote was immediately criticised by Finance Minister Andrej Babis (ANO) who said the state budget would lose Kc14bn in tax revenues as a result.

The cut would not lead to a drop in fuel prices and would only help distributors, Babis said.

Prime Minister and CSSD chairman Bohuslav Sobotka said after Wednesday's vote that many of CSSD deputies did not know what they were voting about.

Urban had made a mistake by submitting such a proposal and he should explain this inside the party, Sobotka said.

Babis said today the Finance Ministry will prepare a study which will analyse where drivers buy fuels.

The analysis would collect information from drivers on borders about whether they buy fuel in the Czech Republic of in the neighbouring countries, Babis said.

Czech petrol and diesel prices are the second lowest in Central Europe, he said.

"Therefore I do not understand what Mr. Urban is speaking about," Babis said.

Urban said earlier the aim of his proposal was to increase fuel sales and excise duty collection.

There may be space for cutting excise duty, but thorough analyses must be made first, Babis said today.

The current excise duty rate on fuels was introduced in 2010. It is Kc12.84 for a litre of petrol and Kc10.95 for a litre of diesel. VAT rate is also added to this amount.

From the neighbouring countries, Germany has the highest excise tax of EUR0.65 (about Kc17.9) on a litre of petrol and EUR0.47 (about Kc12.9) on a litre of diesel.

In contrast, the lowest excise tax rates are in Poland. They reach EUR0.41 (about Kc11.3) on a litre of petrol and EUR0.35 (about Kc9.6) on a litre of diesel.

The voting on Urban's proposal and the voting on the bill as a whole on Wednesday was challenged by CSSD deputy Ladislav Sincl.

Deputies accepted Sincl's request for revocation and repeated the vote today.

But the opposition criticised the procedure. It objected to the fact that Sincl asked for revoking the vote after an hour's break in deputies' session, which immediately followed the voting at the request of CSSD deputies' club.

According to the lower house's rules of procedure, a deputy can object to a vote immediately after the vote. Part of opposition deputies therefore left the chamber before the voting today.

ODS said today it will file a constitutional complaint about the way of approving the bill on tax refunds on oil for farmers.

The amendment is yet to be approved by the Senate and signed by the President.

If it takes effect, farmers could get up to Kc1.3bn in tax refunds only this year. The measure is aimed at increasing farmers' competitiveness.

The right-wing opposition does not approve of the tax relief, saying it creates space for tax evasion.

But Agriculture Minister Marian Jurecka (Christian Democrats, KDU-CSL) disagrees with the opposition. He said farmers need much more diesel oil than the amount on which they can claim a refund.

The tax relief for farmers was cancelled at the end of last year. It should be renewed retroactively also for this year.

Sobotka's government pledged in its coalition agreement to maintain the refunds. It submitted the bill reintroducing the relief to deputies in the spring.

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