(Repeats story published late on Tuesday)
By Jason Hovet
PRAGUE, March 31 (Reuters) - The lower house of the Czech
parliament gave first-reading approval to a series of economic
stimulus measures on Tuesday proposed by the left-wing
opposition under a deal with the centre-right cabinet to develop
joint effort to fight the crisis and build a new administration.
The plan counts on cutting the 9.0 percent value added tax
level to 6.0 percent, raising tax rebates on personal income by
15 percent, and introducing a 25,000 Czech crown ($1,214) scrap
subsidy at a new car purchase, among fifteen other points.
The first-reading approval does not mean all the points will
win final approval, but shows willingness of the parties to
discuss the measures while they talk on forming a new temporary
government of non-political experts that would lead the country
to an early election by Oct. 20 this year [].
"The impact on public sector budgets from the... measures
will not exceed 44 billion crowns ($2.14 billion) per year in
2009-2011," the party said.
That equals about 1.1 percent of gross domestic product. The
government estimated the cost at up to 61 billion, Industry and
Trade Minister Martin Riman said in parliament.
The ruling Civic Democrats oppose most of the proposals, but
have agreed to debate the package. In exchange, the Social
Democrats said they would be willing to consider accepting the
government's proposal for a reduced social security tax.
The government has already adopted a series of stimulus
measures, and expects budget deficit of around 4 percent of GDP.
Analysts said the budget will likely suffer in the
compromises on economic measures and steep spending expected in
the run-up to early elections.
Pavel Mertlik, a former Social Democrat finance minister and
chief economist at Raiffeisenbank, said the spending spree would
be limited by parties' knowledge that big deficits would be
disastrous in the current global economic situation.
"In this situation, there will not be big differences in
fiscal deficits; but definitely there will be differences in
structures of outlays or expenditures," he said.
But other analysts said the Social Democrats' measures would
be costlier for the budget, and warned a combination of the two
big parties' plans would be disastrous.
"The wish list of the Social Democrats would be very
burdensome," said Pavel Sobisek, chief economist with UniCredit
in Prague.
"If the whole list went through parliament along with that
of the Civic Democrats, the only conceivable outcome would be a
catastrophe."
According to the opposition draft, the most expensive
measure proposed by the leftist opposition would be the lowered
value added tax, which would cost 15 billion crowns annually
until 2011. The higher tax rebates would cost 12 billion crowns
annually in the same period.
The party also wants an extra monthly pension payment to
seniors, which would hit 2009's budget for 6.5 billion crowns.
The scrap subsidy would cost 5 billion crowns a year,
calculated if 200,000 buyers took advantage.
(Additional reporting by Jan Lopatka)
