Czech govt deputies clash as reform vote looms

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Leaders of the Czech ruling coalition clashed among themselves and with dissenting backbenchers on Tuesday over fiscal reforms as parliament began debate on a package aimed at cutting the budget deficit.

The centre-right government wants to rebalance taxes and cut benefits to narrow the new EU member's deficit, which has ballooned despite fast economic growth and pushed the adoption of the euro into the next decade.

The cabinet has said it will seek an early election if its plan fails, and disagreements over the extent of the reforms have raised tension in the shaky administration, which has just 100 seats in the 200-seat lower house.

Petr Tluchor, head of the parliamentary faction of the senior coalition Civic Democrats, said that despite the heated debate, he believed the coalition would agree on all disputed details by early Wednesday.

"We will resolve the remaining issues that still have a question mark over them within the coalition today," he said.

Some back-benchers from the right-wing Civic Democrat Party are demanding deeper cuts in the personal income tax rate than the coalition had agreed.

That change won the backing of the ODS parliamentary caucus but not that of the other two coalition parties.

Jiri Cunek, head of junior coalition partner, the Christian Democrats, said he needed to see some calculations before he could sign up for the ODS proposal.

"I hope for an agreement later today," he said.

Another row centred on a demand by one Christian Democrat deputy to drop a plan to make patients pay for seeing a doctor.

In an initial vote on the reforms in June, the cabinet won the backing of two opposition deputies, and both have signalled they would back the government in the final vote expected in the coming days as well. But the coalition still needs to stick together to win the vote.

Political analysts have said they expect the coalition will in the end agree on the reforms in order to avoid the threat of a government collapse.

"My opinion is there will be an agreement in the end ... the political cost would be enormous for (the dissenters) if they sank it," said political analyst Vladimira Dvorakova.

The originally agreed version of the government package cuts back on benefits to parents on leave and other handouts and rebalances taxes, raising the sales tax on food and other basic items and unifying all personal tax brackets at 15 percent.

The government aims to cut the budget deficit to 3.2 percent of GDP in 2008 and, along with further measures to be introduced later, to 2.5 percent in 2010 from 4 percent seen this year. (Additional reporting by Jan Korselt)

[PRAGUE/Reuters/Finance.cz]