The Czech centre-right coalition intends to overhaul the tax system and cut various welfare benefits in order to curb troubled public finances, cabinet ministers said on Tuesday, according to dpa. "This is an inevitable premise so we could draft a decent budget for the next year, so we could stop the expansion of spending," Prime Minister Mirek Topolanek said. The Czech budget deficit, fuelled by government spending, is expected to exceed the threshold of 3 per cent of GDP set by the Maastricht criteria by 0.5 per cent, or reach in total some 120 billion koruny (5.7 billion dollars) in 2007. The reform package, the government says, would reduce the deficit to 3 per cent, or some 100 billion koruny (4.7 billion dollars) as soon as next year. To reach this goal the cabinet intends to overhaul tax and welfare systems. It plans to push through a flat income tax rate of 15 per cent for individuals and raise the lower of the two value added tax (VAT) rates from 5 to 9 per cent. Food now comes with a 5-per-cent VAT and would be more expensive, under the proposed reform. Cabinet members claim all taxpayers would save on income tax. --MORE
