FACTBOX-Key points of Czech coalition agreement

...crisis.

The three parties fall one seat short of a parliamentary majority and must win support from at least one defector from the left wing to survive a necessary confidence vote.

Even if it wins, the government will face an uphill battle to push its reforms through parliament.

The following are key points of the coalition agreement:

* Budget deficit will be cut to 3.0 percent of gross domestic product in 2008, 2.6 percent in 2009 and 2.3 percent in 2010.

* Personal income tax brackets will be abolished and one single flat rate of between 17 and 19 percent will be applied.

* The same tax will be imposed on corporate income, down from 24 percent at present.

* Capital gains, dividend, real estate and most inheritance taxes will be abolished.

* Excise taxes on energy will be raised as part of an environmental reform. This would be compensated for by a drop in social security payments. After 2010, a carbon dioxide tax would be introduced.

* A range of social benefits will be cancelled to halt rise in mandatory expenditure.

* Pensions to be reformed, raising retirement age to 65, increase motivation for private savings, consider the possibility of an opt-out from the state pension system.

* Direct payments by patients at doctors will be raised.

* Will not support or plan building new nuclear power stations. This is important for power firm CEZ which has been considering building new units. Will extend potential liability of operators of nuclear power plants.

* Will not allow extension of north-western lignite mines. This is key for plans to renew ageing lignite-burning power stations in the region.

* Intends to privatise national airline CSA, the Prague Airport, and the Czech Post. Will consider partial sale of railroad Ceske Drahy. Will find a way to use the value of the state holding in CEZ for pension reform.

* No explicit euro entry date

* No explicit stance on the European Constitution, opposed by the Civic Democrats.

* Government make-up: 9 Civic Democrats, 5 Christian Democrats, 4 Greens.

* If the government is not able to push its reform laws through parliament, it will try force early election. (For a story on the coalition deal, click on [ID:nL28739840])

[Reuters/Finance.cz]