The Czech government has announced to change its pension reform plans after it faced criticism from president Vaclav Klaus.
One of Klaus’ points of criticism had been the inclusion of a VAT increase into the reform package. There are currently two VAT rates – one of 10 per cent and one of 20 per cent – which are to replaced by a 20 per cent flat tax. According to Klaus, there was neither a need nor any sense in linking a VAT increase to the pension reform as they had ‘absolutely nothing in common’.
Prime minister Necas now announced that the single VAT rate will only be 17.5 per cent. Furthermore, its introduction will be delayed until 2013 (incidentally the year in which president Klaus’ term ends). Klaus had previously hinted at using his veto against the bill. Even though a presidential veto could be overridden by parliament, the government is probably trying to keep a low profile on the matter after more and more small interest groups criticised the reform during the last days.