Czech News Daily

Czech airlines to dismiss pilot

Tue, 15 Jun 2010 14:35:00 +0200

Czech Airlines (CSA) employs 460 pilots at present, down 70 from the year before. Yet, 40 more pilots will have to leave by the end of 2010 and a similar number in the next two years in connection with the reduction of CSA’s fleet. The information comes from a rescue plan that is supposed to avert the danger of bankruptcy from CSA. The rescue plan also includes restriction of the number of lines only to the most lucrative ones. CSA’s 2009 loss reached the astronomic amount of CZK 3.7 bln, being ten times higher than planned originally. Source Pravo 15

Pension reform to cost billions annually

Tue, 15 Jun 2010 14:34:49 +0200

The pension reform supported by a majority of a pension expert commission would entail so-called transformation costs caused by the obligatory three-percent redirection of a part of the insurance premiums from the public system to individual savings. Vladimir Bezdek, the head of the commission, says that the transformation costs will fully disappear in about 60 years. He estimates the costs at approximately CZK 30 bln yearly on average in the first fifteen years. The transformation costs are supposed to cease to exist in the moment when only people, to whom the redirection of a part of insurance premiums applied, will receive pensions. Pravo 14

Corporate taxes will not rise

Tue, 15 Jun 2010 14:33:06 +0200

Czech companies have the certainty that they will not face an income tax increase in the next four years. The reason is that after the first coalition negotiations about the budget, the VV (Public Affairs) abandoned its proposal to raise the corporate tax from today’s 19 % to 20 %, which had been a part of its election platform. The party says that if they are able to gain money to reduce the budget deficit from other sources, they will not raise the tax. As the ODS (Civic Democrats) and the TOP 09 (Tradition, Responsibility, Prosperity) also keep unambiguously rejecting growth of corporate taxes, there is no power in the Chamber of Deputies now that would increase these taxes in the next four years. Source HN 1

Fortuna to target other markets

Tue, 15 Jun 2010 14:32:12 +0200

The Fortuna betting company, which belongs to the Penta group, enters the Austrian and Hungarian market. It will offer Internet bets in these countries under the FortunaWin.com brand through a Malta based subsidiary company. Online betting is the segment, in which Fortuna has registered the most significant growths in the recent years. Besides the Czech Republic, Fortuna operates also in Poland, Slovakia and Croatia. HN 18

Taxes will increase

Tue, 15 Jun 2010 14:29:45 +0200

The ODS (Civic Democrats) has admitted, for the very first time after the elections, that it will very probably have to increase taxes. The reasons include the poor budget situation and the promised pension reform, for which the emerging government will need new resources. Petr Necas, the likely future prime minister, will support the proposals of the Bezdek pension commission. It plans a transfer of several tens of billions of crowns yearly from the state pension system to private accounts, at which everyone will save money for him or herself. The TOP 09 (Tradition, Responsibility, Prosperity) agrees with the proposal of the Bezdek commission as well. Source HN 1

Tuition for students to be instated

Tue, 15 Jun 2010 14:28:55 +0200

The three parties that negotiate on the government have agreed upon introduction of tuition at universities. The tuition will most likely be paid for the first time in the school year 2013/2014, even though the TOP 09 (Tradition, Responsibility, Prosperity) and the VV (Public Affairs) would like to introduce it sooner. The parties have not reached an agreement yet on whether the tuition would be paid during the studies (TOP 09) or after the student graduates (ODS, VV). The maximum sum of CZK 10,000 per semester is being mentioned. The system of student loans, approved by the cabinet of PM Jan Fischer, will start even before the introduction of the tuition. Each student will thus have an opportunity to borrow up to CZK 54,000 yearly. Source Mfd 1

Insurance companies running out of money

Tue, 15 Jun 2010 14:26:31 +0200

At the end of 2010, the economic crisis will fully hit also the Czech health care, which has been resisting it for two years. Its impact will probably be very hard, because VZP and some smaller insurance companies will run out of the multi-billion surpluses they saved during the previous three years. Unless something changes, they will start to get into debts due to the high costs of health care and lower insurance premium collection. What it means for patients is that health care restrictions, similar to those in 2005 and 2006, may apply as soon as in spring 2011. Source HN 1

CD cargo under audit, again

Tue, 15 Jun 2010 14:24:47 +0200

The state-owned Czech Railways, the owner of the CD Cargo company, has sent KPMG auditors for an extraordinary inspection into the company. The objective is to find out whether CD Cargo, one of the biggest freight carriers in Europe, carries out its business in an efficient way. The reason is that CD Cargo has reported a high loss of CZK 378 mln, instead of profits. The first inspection in CD Cargo started in 2009 after the regular auditors expressed objections to a part of the company’s accounting. However, Oldrich Vojir, the head of the supervisory board of CD Cargo, said that it was non-standard for a parent company to carry out an audit in its subsidiary company. A change in the statutes therefore followed, which made the current inspection legally correct. Source MFD 6

Klaus vetoes CNB bill

Tue, 15 Jun 2010 14:22:45 +0200

President Vaclav Klaus vetoed a bill on the Czech National Bank, which was supposed to define the central bank’s operation after the Czech Republic’s accession to the euro area. The Czech Republic has not fixed any date of adoption of the euro yet. As the current Chamber of Deputies cannot overrule Mr Klaus, the bill thus ends its legislation process. The bill represented mandatory transposition of the European Union’s law into the Czech legal order. The President noted that if the bill came into force, two valid laws on the Czech National Bank would exist in parallel. Source LN 14

Bakala gave millions to right wing parties

Tue, 15 Jun 2010 14:20:46 +0200

Financier Zdenek Bakala has announced that he donated the total of CZK 28.5 mln to the ODS (Civic Democrats), the TOP 09 (Tradition, Responsibility, Prosperity) and the VV (Public Affairs) before the elections. He decided to support the parties because they offered responsible politicians with a reform programme before the elections. The man, who was listed among the richest men of the world by the US magazine Forbes, donated CZK 15 mln to the ODS, CZK 7.5 mln to the TOP 09 and CZK 6 mln to the VV. Source LN 1

Stricter norms for foreign entrepeneurs

Tue, 15 Jun 2010 14:18:00 +0200

The Interior Ministry has proposed a bill tightening the conditions for business activities of foreigners in the Czech Republic to the cabinet. For example a condition required for the issuing of an entrepreneur visa would be a controlling interview in Czech with consular officers or at least two years of stay in the Czech Republic. The change is supposed to come into force as of December 2010. Its objective is to eliminate the cases when foreigners, who were issued a residence permit in order to run business activity, did not carry out such activity factually. Source LN 5

New VAT proposal

Tue, 15 Jun 2010 14:17:00 +0200

The proposal of a pension reform that is being finished by an expert commission led by Vladimir Bezdek is much more radical than expected. According to the proposals, the Czechs might pay less money from their salaries for pension insurance in the future, but at the cost of a step increase in the prices of food, medications and other goods. Instead of today’s 28 %, people would contribute only 23 % of their salary, saving additional 3 % to their individual pension account, either obligatorily, or voluntarily. According to the proposal, the changes are supposed to begin in 2015 at the latest. Source HN 1

CSSD to head chamber of deputies

Sat, 05 Jun 2010 16:14:00 +0200

The CSSD, the party that won the elections with the margin of less than 2 %, has a chance to gain at least some important post. The representatives of the ODS, the TOP 09 and the VV, who negotiate about their mutual coalition, have admitted that they might leave the position of the chairman of the Chamber of Deputies to the CSSD. They would thus follow an earlier custom, according to which the Chamber of Deputies is presided by the opposition, which controls the government. CSSD deputy chairman Bohuslav Sobotka might become the chairman of the Chamber. Source: Mfd 1

State budget deficit

Sat, 05 Jun 2010 16:12:00 +0200

The state budget had a deficit of CZK 95.4 bln as of the end of May 2010; it represents the worst figure in the whole existence of the Czech Republic. The deficit increased by another CZK 17 bln in May 2010 alone. The state budget for the whole year 2010 was approved with a deficit of CZK 162.9 bln. The 2009 budget had a record all-year deficit of CZK 192.4 bln, even though the deficit amounted only to CZK 71.4 bln in May 2009. Finance Minister Eduard Janota said earlier that he planned further austerity measures still in 2010. The aim is to keep the planned public finance deficit on the level of 5.3 % of the gross domestic product. Source: Právo 15

New government to decide on Temelin

Sat, 05 Jun 2010 16:05:00 +0200

The new coalition government formed by the ODS (Civic Democrats), the TOP 09 (Tradition, Responsibility, Prosperity) and the VV (Public Affairs) may significantly affect the country’s economy. If it is formed by the mentioned parties, the coalition will have an advantage. Whatever it approves it will push through without problems with its 118 deputies; moreover, it will easily overrule any prospective veto. The new government must decide about the finishing of the construction of the Temelin nuclear plant. Source: Právo 14

Communists losing their influence

Sat, 05 Jun 2010 15:59:00 +0200

The KSCM (Communists) have gained 26 seats in the elections, the same number as in 2006. However, if the ODS, the TOP 09 and the VV reach an agreement on the formation of a government, the Communists will lose a significant part of their influence. The three parties concur that they will not support the Communist aspirations to posts in the leadership of the Chamber of Deputies. KSCM chairman Vojtech Filip has been deputy chairman of the lower chamber of Parliament since 2002. Source: LN 2

Gas prices on the rise

Sat, 05 Jun 2010 15:57:00 +0200

Customers, especially those of the regional gas suppliers RWE and E.ON, will pay more for gas supplies as of the second half of 2010. Prazska plynarenska will retain the prices of gas supplies at the current level. E.ON will increase its prices by 6 % on average. RWE, which supplies gas into the rest of the country, except for Prague, will increase its natural gas prices by 4.9 % on average. Source: LN 14

Student to get loans of CZK 54 000

Sat, 05 Jun 2010 15:55:00 +0200

University students might receive a monthly contribution for studies plus loans of up to CZK 54,000 yearly. The contributions would be provided to all students and the government is supposed to lose no money, as the contribution would be covered from tax discounts for dependant children that are available for parents now. The age limit, over which students cease to have advantages, would be increased as well. Source: Mfd 5

Large parties lose millions

Sat, 05 Jun 2010 14:49:00 +0200

The ODS lost 800,000 voters and the CSSD 500,000 voters in comparison with the previous Chamber of Deputies elections. This means a slump by CZK 80 mln and CZK 50 mln in the state subsidies for received votes alone. Moreover, the campaign expenses of both parties exceed the sum they will receive from the government. Source: LN 6

The winner takes it all

Sat, 05 Jun 2010 14:43:00 +0200

Bohuslav Sobotka, the acting head of the CSSD, will be entrusted with negotiation about the new government, and if he does not succeed then ODS leader Petr Necas will get a chance to become the new prime minister. President Klaus has already suggested that he would give the first chance to the winner of the elections. Mr Klaus strictly abided by this unwritten rule after the previous elections. Source: Mfd 2