Czech parlt gives prelim nod to tobacco tax hike

PRAGUE, Sept 15 (Reuters) - The lower house of the Czech parliament gave preliminary approval on Friday to a draft law raising the excise tax on tobacco, aimed at boosting budget revenues next year.

The draft, approved in the first of three readings, was prepared by the country's former leftist government, but was endorsed by the new right-wing minority administration as well.

The right-wing Civic Democrat government however aims to amend the draft in the second reading, lowering the proposed hike so taxes only rise to the minimum level required by the European Union.

The original proposal would raise budget revenues by estimated 10 billion crowns ($447.4 million) next year.

The Civic Democrats also aim to cut excise tax on petrol in the second reading, which would cut budget revenue by 5 billion crowns next year, Civic Democrat deputy Michal Doktor told Reuters.

The proposals come at a time when the country's fiscal balance is eroding and the public sector deficit is expected to jump to 4.6 percent of gross domestic product next year, far above 3.3 percent limit set in the country's euro convergence programme.

The fate of the tax draft is unclear, given left-wing opposition to lower taxes and the lack of government majority in parliament.

The lower house is also discussing proposals to delay previously adopted laws changing the system of sickness benefit payments and civil service law. A delay in the dates when the laws take effect are designed to save money next year. ((Reporting by Jan Lopatka, editing by Chris Pizzey; prague.newsroom@reuters.com; Reuters Messaging: jan.lopatka.reuters.com@reuters.net; +420-224 190 474)) ($1=22.35 Czech Crown)

Keywords: ECONOMY CZECH TAXES