* Czech leftists plan tax hikes
* Aim for euro in 2014-2015
* Analysts see plans insufficient, euro may come later
By Robert Mueller
PRAGUE, Jan 21 (Reuters) - The main Czech leftist party
which leads opinion polls ahead of election in May plans to hike
taxes to plug budget holes, it said in a economic programme
revealed on Thursday.
Social Democrat chief Jiri Paroubek said he saw euro
adoption in 2014-2015, which analysts said was a highly
optimistic date given deep budget gaps and the lengthy euro
entry procedure.
The latest opinion poll released on Monday showed the
leftists had 28.7 percent support, 8.6 percentage points ahead
of the Civic Democrats. No party is however expected to win a
majority and the winner will need to seek coalition partners.
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The Czech fiscal gap soared to nearly 7 percent of gross
domestic product last year as the economy shrank by over 4
percent, even though the country, rated 'A' by Standard and
Poor's, was not forced to bail out any banks and avoided a debt
meltdown seen in regional peer Hungary.
This year's budget sees a deficit of around 5.3-5.7 percent
and the country's interim government says fiscal consolidation
aimed at preventing a fast debt growth from the current 40
percent of GDP required reforms of the welfare and pension
systems.
"In order to keep our good sovereign rating... it is enough
to continue with the fiscal consolidation already started,"
Paroubek told a party conference.
"Different goals could threaten the revival of economic
growth and social cohesion in the country. We will see to it
that the burden is not placed on the employees, while the 5
percent of the richest enjoy lower taxes."
The party said it would hike personal, corporate and excise
taxes to raise 35-45 billion crowns ($1.92-2.47 billion) per
year, and also raise dividends paid by majority state-owned
power firm CEZ <> by 10 billion crowns.
It aims to achieve savings through an audit of state
spending, cutting corruption and clamping down on tax evasion.
The plan calls for a hike in the corporate tax rate to 21
percent from 19 percent, and for instituting a new 38 percent
tax bracket on personal income over 1.2 million crowns per year.
Analysts cast doubt on the plans, saying they may not be
realistic.
Pavel Sobisek, chief analyst at UniCredit in Prague, said he
was surprised by the lack of cuts on the expenditure side.
"I would conservatively divide the contribution from higher
taxes by two. When I compare that with additional costs of
social transfers, the net impact is close to zero," he said.
"It does not seem that it would be possible to lower the
fiscal deficit below 3 percent on the basis of the proposed
measures."
Sobisek also pointed out that the party planned cutting the
budget gap below the euro-entry limit of 3 percent by 2014 and
join already by 2015.
That would however be hardly possible, given the need for an
assessment by the euro zone countries. Narrowing the gap in 2014
would allow euro entry in 2016 at the earliest, he said.
The party has been building its lead over the main
right-wing party, the Civic Democrats, who are more in favour of
spending cuts, but less keen on euro adoption.
(Writing by Jan Lopatka; editing by Ron Askew)
