Czech PM Necas wins confidence vote, passes tax hikes

Wed Nov 7, 2012 11:07am EST
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By Robert Muller

PRAGUE (Reuters) - Czech Prime Minister Petr Necas won a confidence vote in parliament and pushed through tax rises on Wednesday after quelling a rebellion that threatened to bring down his center-right government.

The lower house voted to raise value-added and income taxes in a move aimed at narrowing the budget deficit next year after a group of dissenting backbenchers in Necas's Civic Democratic Party dropped their opposition to the legislation.

The rebellion was the biggest challenge to Necas's two-year rule because it followed defections and coalition rifts that had steadily stripped his government of its majority in the 200-seat lower house.

His victory removes an immediate danger for the government but its weak standing is likely to continue to complicate policymaking.

"This is one of the votes that confirms confidence in the government and allows it to set a state budget that respects a deficit below 3 percent of GDP and that also includes pro-growth measures," Necas said.

Tax hikes and spending cuts have pushed down borrowing costs to all-time lows but have weakened domestic demand and tipped the central European economy into a recession in late 2011.

Hit by a series of defections since the center-right parties won the country's largest parliamentary majority in a May 2010 election the three-party coalition now holds only 99 seats.

The government's tax measures - which were tied to a confidence motion - were supported by 101 MPs, including a few independents, with 93 MPs voting against.   Continued...

Czech Republic's Prime Minister and Chairman of the Civic Democratic Party (ODS) Petr Necas gives a speech during the party's congress in Brno November 4, 2012. REUTERS/Petr Josek