November 6, 2019 / 5:12 PM / 4 months ago

Czech parliament approves tax hikes to meet 2020 budget target

PRAGUE, Nov 6 (Reuters) - The Czech parliament’s lower house approved a tax package on Wednesday relied on by the minority government to reach planned budget revenues for 2020 and including a one-off tax on insurers’ reserves.

The coalition of Prime Minister Andrej Babis’s ANO party and the centre-left Social Democrats, helped by the opposition Communists, pushed through tax hikes on tobacco, alcohol, gambling and other items which the Finance Ministry expected to add 10 billion crowns ($434.88 million) to revenue.

A number of floor amendments, proposed by the opposition, however made it made unclear whether the planned income increase would be fully met.

The bill, which still needs a nod from the upper chamber of parliament, is aimed at keeping the central budget deficit at this year’s 40 billion crowns or 0.7% of economic output.

The finance ministry expects the overall public sector, including regional and municipal budgets and various other public institutions, to swing to a deficit of 0.2% of gross domestic product in 2020 from a 0.3% surplus this year.

The Czech economy has slowed but is still expected to grow 2.2% next year, after 2.4% this year.

The tax package also included a change in the way the government will assess reserves of insurers, in effect levying a one-off tax on that part of the financial sector, payable in 2021 and 2022.

This change was criticised by the opposition and went against a recommendation from the central bank which oversees the market. ($1 = 22.9950 Czech crowns) (Reporting by Robert Muller Editing by Peter Graff)

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