Czech government faces collapse over austerity

[October 24, 2012]  PRAGUE (AP) -- The Czech Republic's government edged closer toward collapse after the conservative party of Prime Minister Petr Necas failed to reach a deal with lawmakers over unpopular austerity measures.

In September, Parliament rejected a 1 percent increase in the sales tax on retail goods and a 7 percent income tax increase for the highest-earners. Six lawmakers from Necas' party voted against the measures, saying they are against their party's values.

Necas resubmitted the measures, linking their passage to a vote of confidence in the government. If the vote, which could be held this or next week, also fails, the coalition government will fall.

Necas said Tuesday talks with the rebel lawmakers failed but are set to continue.

The measures aim to bring the budget deficit below 3 percent of GDP.

[Associated Press]

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