Czech PM confident party congress will help quiet rebels

PRAGUE Fri Nov 2, 2012 5:57am EDT

Czech Republic's Prime Minister Petr Necas smiles during an interview with Reuters at government headquarters in Prague March 18, 2011. REUTERS/David W Cerny

Czech Republic's Prime Minister Petr Necas smiles during an interview with Reuters at government headquarters in Prague March 18, 2011.

Credit: Reuters/David W Cerny

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PRAGUE (Reuters) - Czech Prime Minister Petr Necas will seek to use his re-election as Civic Democrat (ODS) leader this weekend to quash a rebellion over tax hikes that threatens to bring down his government.

Civic Democrat leaders are racing to sway a handful of rebel party deputies to support a tax bill that has been attached to a confidence motion in a lower house vote next week.

Without the deputies' votes for the bill, which would raise sales tax by 1 percentage point and introduce a temporary income tax on high earner earners, the three-party, center-right government faces collapse.

The rebels have stood firm after weeks of negotiations, arguing that the tax rises go against the party's promise to voters, although Necas, other party officials and commentators say the group's main aim is to bring down the prime minister.

Necas, running unopposed so far for reappointment as party chairman, said the likelihood of a last-minute candidate appearing was slim.

"I am convinced that this government coalition will continue with me as prime minister after the congress," Necas told newspaper Hospodarske Noviny in an interview published on Friday.

"(The congress) will give a clear mandate to new leadership. I will have a stronger mandate for negotiations with our dissatisfied deputies as well as coalition partners."

Necas has so far won the nomination for chairmanship from 10 regional chapters out of 14 in voting before the congress.

This raises his chance of winning the majority of delegates at this weekend's congress, although delegates do not necessarily have to vote according to their chapter nomination in a final vote set for Sunday.

His government has used tax hikes and spending cuts to reduce the budget deficit to near the EU's 3 percent of economic output ceiling, winning the trust of financial investors and lowering debt costs - but also helping tip the economy into recession.

His ruling coalition, which was elected in 2010 with the largest parliamentary majority since the Czechs split with Slovakia in 1993, became a minority administration with the departure of one deputy from the party this week.

The coalition holds 99 of the 200 seats in the lower house. It has relied on independent deputies in past votes and could continue to do so to pass future legislation.

Necas has said he would resign if he was unable to pass the tax bill, worth 22 billion crowns earmarked for the 2013 budget.

(Reporting by Jason Hovet; editing by Patrick Graham)

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