Czech President Klaus vetoes car scrap subsidy

PRAGUE, July 9 (Reuters) - Czech President Vaclav Klaus vetoed a law on Thursday introducing a subsidy for buying new cars in turn for scrapping old ones.

The veto means the law, approved after an agreement on anti-crisis measures by the two biggest Czech political parties, returns to the lower house of parliament where it must win at least 101 votes of the 200 total, versus the 82 cast for its original approval.

"This is a law that is discriminatory, non-systemic, with many legislative mistakes and, in its final consequence, with a highly uncertain positive effect," Klaus's office said in a statement.

"It favours industry at the expense of other sectors of the economy and within that it gives preference to short-term interests of several strong players from the automotive industry," he said.

The Czech economy shrank by a record 3.4 percent in the first quarter, mainly due to a sharp drop in demand in its key export markets such as Germany.

The veto also halts plans to raise a tax deduction for families with children and to raise child and unemployment benefits.

The Czech Republic is a car exporter with major producers being VW's Skoda Auto (VOWG.DE), a joint Toyota-PSA plant (7203.T) (PEUP.PA), and a new Hyundai (005380.KS) factory.

But most cars sold in the country of 10.5 million are imported, which critics say would diminish the impact of the measure and needlessly burden the state budget, already heading for around 5 percent gap related to gross domestic product this year.

The 30,000 crown-per-vehicle scrap subsidy was proposed by the leftist Social Democrats. The right-wing Civic Democrats have supported the measure as a part of a wider anti-crisis plan.

(Reporting by Jan Lopatka; Editing by Victoria Main)