Press Conferences

27. 6. 2008 14:57

Press Conference after the Meeting of the Government, Held on Friday 27th June 2008

Jana Bartošová, Government spokesperson: Good afternoon, ladies and gentlemen, welcome to the press conference which is held in the course of the suspended meeting of the government. Allow me to welcome the Prime Minister, Mr. Mirek Topolánek, and the Minister of Finance, Mr. Miroslav Kalousek. I ask the Prime Minister for his introductory speech.

Mirek Topolánek, Prime Minister of the CzechRepublic: In the introduction, I would like to apologize, as we are not able to find an ideal term for the press conference. If we organize a press conference after the meeting, you do not manage to prepare information for TV news. If we organize it at one o'clock, half of items are not debated and therefore I cannot inform you on any conclusions. As to the items which have already been debated, and which are important from the point of view of the general public, we debated the statement of the government to the proposal of the Senate of the Parliament of the Czech Republic which was submitted to the Constitutional Court. Mr. Minister Kalousek will inform you on two essential points; I mean the debate on the draft amendment to the Income Tax Act and the preparation of the state budget – basic parameters for 2009 and medium-term outlook for 2010 and 2011. We also debated the government bill on diplomacy, the information on implementation of tasks in the second stage of the pension reform, about which the Minister of Finance also can give you basic information. We postponed the debate on the proposal of deputies for direct vote of the President by one week because of absence of the Chairman of the Green Party and the Deputy Prime Minister Martin Bursík. We approved financial and personnel provision for the performance of Czech Republic's presidency of the Council of the European Union and we also debated the report on the situation in the sphere of human rights and national minorities. As to the issues which have been debated, one of them concerned the proposal of the state budget for research and development sphere, which had been submitted at the last meeting of the government and approved today without problems. The last issues unfortunately have not been debated yet and therefore it is not possible for me to inform you on them.

Jana Bartošová, Government spokesperson: I thank the Prime Minister, and now the Minister of Finance has the floor.

Miroslav Kalousek, Minister of Finance: Good afternoon, ladies and gentlemen, let me inform you briefly on the approved issues which concerned the Ministry of Finance. The government approved the draft amendment to the Income Tax Act. Finally we agreed to propose 15% tax rate for year 2009 and to reduce social insurance for employees by 1,5%. I would like to point out that this reduction concerns sickness insurance and contributions to the active policy of employment; it does not mean reduction of payments to health insurance and social insurance. I registered during that public discussion certain misunderstanding - that we wanted to decrease revenues of the pension account. I point out that by this proposal the pension account will not be decreased by a single crown. I am of the opinion that this proposal has several advantages in comparison with the transition to the 12,5% rate. One of those advantages is that the rate of progression or the rate of solidarity will be maintained. In case of transition down to 12,5%, it would be reduced. Also those "teeth" for income groups between ten and forty thousand crowns will be removed. Direct payments will be reduced really to all people including those who would not be affected in case of 12,5% tax rate, because low-income groups of inhabitants would not be affected by the reduction of the tax rate as they do not pay any income tax thanks to high tax reduction. In case of decrease of social insurance, a taxpayer with salary of 10 000 crowns will safe 150 crowns monthly, it means that his income will be higher by 150 crowns. Last but not least, the advantage is also the fact that social insurance is not a "shared tax", unlike the income tax. It means that this reduction will not affect revenue of municipalities and regions and it will affect only the state budget; it was reflected by the government with full responsibility. As to the debate on further important material, which was decision on expenditure limits for 2009 and expected limits for 2010 and 2011, this material was also approved after a discussion. With regard to the fact that reduction of expenditure limits is by half a percent higher than the Minister of Finance proposed, this fact was reflected in that material. It means that we will expect both revenues and expenditure lower that it was proposed. We can reduce direct payments of course, but we must also reduce expenditure accordingly. In this connection, let me inform you that the government approved the limit for 2009 and the state budget deficit is proposed at the amount of 38,1 billion crowns; total expenditure is planned at the amount of 1053 billion crowns; this proposal is rather ambitious and it was proposed at the expense of number of economies; nevertheless, these economies would be quite well-founded. After eight years of wasting money at the expense of the future, the government is firmly determined to put the trajectories of public budgets back to civilized corridor. Together with the Deputy Prime Minister, we informed the government on the second stage of the pension reform. Both members of the government and the Governor of the Czech National Bank held lively discussion on it and we thank for their comments. The second stage concerns in particular pension funds; it means that we are preparing propositions and legislative measures for pension funds, absolute separation of the property of shareholders and deposits of beneficiaries. In the framework of the transition to the new system, a parallel system will implemented so that nobody would be troubled by the transfer from one institution to another. It will be their decision whether they would want do rest in existing fund or to be transferred to some new one. We will pay great attention, of course, to relatively strict regulation and we will supervise investment policy and investment strategy of these investment funds. That supervision will have to be really extraordinary as people will be saving their money for tens of years for their retirement age. We also discussed certain motivation measures so that taxpayers would be motivated to save money. We want to use dominantly tax reliefs, not state contributions and we also want to motivate beneficiaries to withdraw their money in the form of life annuity, not in the form of lump-sum settlement. Also in this case we want to use tax relief; it means that in case somebody decides to withdraw money in the form of life annuity, his money would be tax-exempt.

Jana Bartošová, Government spokesperson: I thank the Minister of Finance, and now the Prime Minister will add something.

Mirek Topolánek, Prime Minister of the CzechRepublic: I would like to add that if we are discussing the second stage of the pension reform, we imply that the Senate and the President will approve the first stage. I regard as a breakthrough the fact that the Chamber of Deputies passed the first stage together with other fifteen laws. I think it is a great success of the government and a confirmation of the reform effort, which had been frequently doubted; especially the first stage of the pension reform has not only the parametrical dimension, it also set basis for the implementation of the second stage and for the third stage, on which there are different opinions for the present. This government is of the opinion that it might be an opt-out, but I think that just the first and the second stages, which will be implemented, set basis for the future solution.

Jana Bartošová, Government spokesperson: Thank you. I ask for your questions. The TV Prima.

Tomáš Drahoňovský, TV Prima: Good afternoon, Tomáš Drahoňovský, the TV Prima. I would have a question to Mr. Minister Kalousek. Your original proposal, as far as amendment to the income tax, was to reduce it by 1%. I would like to know if you could express the difference numerically, provided it is definitely approved those 1,5%?

Miroslav Kalousek, Minister of Finance: I have already commented it. The total decrease of that 0,5% means about 5 billion crowns. Excuse me, if it will be five billion and a half, as it also depends on the actual employment indicator. The government reduced the relevant revenues and expenditure of those limits; it means that we reduced them by 0,5% more than the Minister of Finance proposed, and we also decreased expenditure.

Jana Bartošová, Government spokesperson: Thank you, the Czech TV.

Czech TV: Good afternoon, I would like to ask a question – we have spoken to a man who sees a great problem in it; I mean Vlastimil Tlustý from the group of deputies of the ODS. He says that he was originally striving for those 12,5% income tax; nevertheless he adds that there is no problem with the tax rate, but he insists on reaching the result. He is of the opinion that to reach it, it would be necessary to reduce the social insurance by 2,5% and that it is also the opinion of the expert's commission of the ODS. I ask you for your comment; is it possible to reduce the rate so much? Would it be acceptable with regard to the state budget?

Mirek Topolánek, Prime Minister of the CzechRepublic: I apologize; it would be some ten or eleven billion crowns which would have to be found somewhere. We wanted to meet two of those three targets in fact. It was not possible to meet all of them. It is apparent; the discussion was very long and I am not going to explain it in detail. For us it is crucial to solve the problem which arose in the last year, and which was rather fictitious; nevertheless, that was the main requirement, the main promise that we did in the framework of the agreement on that big package of laws – that there will not be those inequities, those "teeth" in case of groups of inhabitants with incomes between ten and forty thousand crowns. It is solved of course by the submitted proposal of the government. As to the second great target, it means the gradual decrease of the public budgets deficit, and the state budget deficit, we regard it as very important as it has influence on all the other parameters. If we accepted the proposal of Vlastimil Tlustý, it would mean to add further eleven billion crowns to those economies amounted to five billion crowns, which we approved today. And I say with all responsibility that it is not possible do within the individual ministries, and with respect to the existing legislation concerning especially mandatory expenditure, and with respect to changes which have been done. I think that it is clear, and I repeat it for the third time that both variants are possible, both variant have advantages and disadvantages; nevertheless, the principal advantage, that reduction of tax burden, meet both variants. If the Chamber of Deputies prefers the government proposal, I will be glad. If the Chamber of Deputies decides to maintain the existing wording, the government will be able to cope with it.

Miroslav Kalousek, Minister of Finance: I would like to add something to it, which may not be apparent at the first sight. If we wanted to reduce more than by those 1,5% in case of an employee, we would have to decrease payments to the pension insurance, which we regard as out of question because we are striving for the stabilization of the pension system. It means that in case of an employee, it would be possible either to reduce revenue basis of the pension account, which would be irresponsible, or to reach that reduction by the increase of payments of employers; nevertheless this would affect those who pay tax from employment earnings at the amount of 15%; it mean that it would have nearly zero relevance. Therefore I do not regard that discussion as relevant; it is not a relevant discussion. If we decrease the social insurance by one or by one and a half percent, it will influence the economy of this country in a way which tends to zero. I take it as a political problem, which I respect.

Jana Bartošová, Government spokesperson: Thank you, the Z1.TV

Z1 TV: Good afternoon, I have two questions. I would like to ask a question – you said, Mr. Minister, that you would maintain that budget at the expense of economies. Could you rather specify which spheres would be affected, what the economies would concern it? And then, I would like to ask whether the budget can be influenced by the stagnating German economy.

Miroslav Kalousek, Minister of Finance: Well, look – one of key indicators for the future revenue of the state budget is growth of the gross domestic product. We are small liberal and dominantly pro-export oriented economy, and therefore external influences will always be more significant than the economic policy of the government. As a member of the government, I should add "thank God that it is like this". So naturally, if neighbour states stagnate or the external demand is not as high as we suppose than revenue side of our budget will be influenced. Nevertheless, we expect just slight slow-down; we do not expect such a growth as it was in 2007, but will still expect relatively high growth between four and five percent. We suppose that this prognosis will be fulfilled. Economies will have to be reached in all the spheres; it means that all ministers received less in comparison with their expectations, desires and medium-term outlooks. It means that ministers either received less money or they will have to work with smaller volume of money – they will have to allocate less into the individual budget headings – that will be their problem. But the government is in the situation when it will have to cover, with regard to the inflation, some expenditure which had not been expected in medium-term outlooks – pensions, salaries in the sphere of education, those four billion for teachers, certain further expenditure connecting with valorisation, which was about 26 billion crowns of unexpected expenditure. The government gave me two options. Either to do what the previous governments with social democratic ministers did -  to increase the deficit by these expenditure – or the government could say – and I am proud of it that it will not increase the deficit by a single crown and that those 26 billion crowns, which will have to be covered because they are expenditures of a mandatory character, will have to be covered by economies. I repeat that the government of Mirek Topolánek is the first government which respects the Act on Budgetary Rules since the time this law became a part of our law system. If the government respected the law since 2004, when this reform measure was enforced, then we would have balanced public budges. Previous government enforced a law which was ignored by it. In case of the year 2006 the provision of the Act on Budgetary rules was broken by 56 billion crowns.

Jana Bartošová, Government spokesperson: Thank you, further question, please.

Petra Vostrčilová, Reuters: Good afternoon, I have three brief questions to the Mr. Minister. The first one concerns just the plan and the fiscal outlook of the Czech Republic for the following two years. Could you say some details on the deficit of public budgets?

Miroslav Kalousek, Minister of Finance: Excuse me, do you ask me about the trajectory of the deficit or ...

Petra Vostrčilová, Reuters: I ask about the deficit trajectory and whether you have outlooks for 2009 and 2010.

Miroslav Kalousek, Minister of Finance: 1,5, and for 2011 1,2.

Petra Vostrčilová, Reuters: Thank you very much and the second question concerns ...

Miroslav Kalousek, Minister of Finance: ... I am speaking about public deficits, according to the methodology ESA 95; in cash methodology it would be less. And as to the state budget, it would be significantly below one percent.

Petra Vostrčilová, Reuters: Yes that is exactly I was asking about, and the second question concerns this year's budget. You mentioned rather optimistic assumption that the deficit of the state budget could be by about twenty billion better than was the plan. What is your opinion now in the half of the year?

Miroslav Kalousek, Minister of Finance: I have still the same opinion; nevertheless, we are in the half of the year so, ... The deficit will be certainly lower than that which was planned, but if you want to know the exact figure, then ask the Delphi oracle. I am just the Minister of Finance.

Petra Vostrčilová, Reuters: And the third question concerns shares of the ČEZ and the state share in the company. Stockbrokers said that the state has not sold any shares for two weeks. I would like to know if you want to make some comments. Did you decide to finish that transaction or does your communication strategy still remain?

Miroslav Kalousek, Minister of Finance: If we decided so, we would say that. And because we did not decide so, we do not say anything and I am amused by speculations of stockbrokers. Results of our sale are extraordinary high. We are reaching prices high above the average level. I think that the way of this sale is absolutely transparent and that it respects all the rules common on the stock market; it earned many billion more than it had been expected and I am of the opinion that we have successfully outwitted some speculators. Well, let them continue speculating!

Jana Bartošová, Government spokesperson: Further question, please.

Mirek Topolánek, Prime Minister of the CzechRepublic: Yes, I should really praise Mr. Kalousek.

Hana Škodová, Právo: I would like to ask about the pension reform. What is the time schedule of the second phase, about which you debated today, and regarding the third phase – can you say your standpoint to the opt-out? When is to be done?

Miroslav Kalousek, Minister of Finance: You are asking about the third phase. The second phase ...

Hana Škodová, Právo: I was asking about the second phase and then about the third phase.

Miroslav Kalousek, Minister of Finance: Together with the Deputy Prime Minister Nečas, we will submit, based on today's information, absolutely concrete theses by the end of September. Provided those theses are approved or amended somehow, I will begin to work on a concrete legislative proposal, which will be submitted by the government to the Chamber of Deputies in the first quarter of the next year, as I suppose. The issue of the opt-out is an issue I believe in; nevertheless, it concerns the third phase and I take the resolution of forces in the Chamber of Deputies into consideration, but we are ready to work on it anyway.

Mirek Topolánek, Prime Minister of the CzechRepublic: I add to this that if we do not manage to submit the opt-out in 2010, it will be undoubtedly a topic of the election campaign of the general elections and I hope that by that time the correct character of those previous measures is confirmed. As well as the Minister of Finance, I am not able to say now whether it will be done by this government, but I insist on the fact that all the steps which will be taken will enable any cabinet to take this step, in a time in which there will not a risk arise for pension development and the pension system development, whether it will be done in 2010 or in 2011. I do not think it is essential; the important steps are the first ones. 

Jana Bartošová, Government spokesperson: Thank you, the TV Prima.

Tomáš Drahoňovský, TV Prima: I have a question to the Prime Minister and I revert again to the amendment to the Income Tax Act. Previously, the amendment had been withdrawn from the meeting of the government because there was not sufficient support in the group of deputies of the ODS. Does it mean that now, when the government approved the proposal, the support is ensured? Have you already discuss it with members of the expert commission, with Mr. Doktor and such like? Is he satisfied with the standpoint?

Mirek Topolánek, Prime Minister of the CzechRepublic: I must say that I respect expert's standpoints of all the three coalition parties, and therefore we have also took the recommendation of the expert commission of the ODS into consideration. Nevertheless, the fact that we debated this material as late as today does not have any connection with results of work of those expert commissions, because it was connected with the decision-making process on medium-term expenditure limits; these materials had to be debated jointly because they are closely connected. After decisions preceding the decision on expenditure limits on the state budget for the next year we had also to modify the original proposal of the Ministry of Finance for the state budget and medium-term expenditure, because the decision on the 0,5% decrease influenced the material itself; so, there is no direct correlation there. We absolutely respect those expert's opinion of coalition partners and the ODS. Therefore we finally pushed through further reduction by 0,5% as against the proposal of the Ministry of Finance; so there was respect to those expert's opinions evident there.

Jana Bartošová, Government spokesperson: Thank you, the Czech TV.

Veronika Marková, Czech TV: I have rather a technical question. What was the result of the vote on this proposal? Did all of you inclined to that 1,5% reduction, or ...

Mirek Topolánek, Prime Minister of the CzechRepublic: I do not regard this question as quite correct; I have never answer similar question so far.

Jana Bartošová, Government spokesperson: Are there any further question?

Petr Janiš, Právo: Good afternoon, you withdrew that issue, but I would like to know your opinion on the referendum on the direct vote of the President, Mr. Prime Minister. And the second question – did you debate the salary raise of teachers?

Mirek Topolánek, Prime Minister of the CzechRepublic: Well, it was debated and we did it as we had said and as we had thought. Perhaps it is on the agenda today; it concerns the state budget and I do not expect any problem as far as the following year is concerned. The amount is already included in the budget and therefore I do not see any problem in it. The first question concerned the direct vote of the President. I will not say anything else about it than we agreed we would debate it in the framework of the C9 (meeting of 9 representatives of coalition parties) and that is why we postponed it. I do not know exactly when the session will be held, perhaps before the meeting of the government next week. Nevertheless, I respect the opinion of our coalition partner regarding the referendum. I do not have any unambiguous opinion now. I regard referendum as a quite extraordinary tool which should be used in case of issues of our sovereignty or other crucial issues; generally, I do not like referenda a lot and it is widely known. If you are monitoring my statements to the direct vote of the President, I am not an adherent of the direct vote, as well as part of members of the ODS, and I have never concealed it. There are polarized opinions within the ODS starting from members who would support the direct vote of the French model or any similar one, to those members who refuse it or do not regard this change as a change for the better. I had several statements on this issue and I am not going to repeat them.

Miroslav Kalousek, Minister of Finance: Regarding the question of Miss. Marková – we really do not disclose details of votes on the individual issues. However, with regard to the fact that the government decided in a different way than the Minister of Finance had proposed, it would be good to say how I voted. Yes, I supported that proposal because the attitude of the government was very responsible and the government also changed proposal of total expenditure. It means that revenues may be reduced only on condition of reduction of expenditure. Then the Minister of Finance can agree with it. The amount of the deficit remained the same.

Jana Bartošová, Government spokesperson: Well and now definitely the last question.

Nikola Bojčev, Radiožurnál: Good afternoon, I would ask Mr. Minister Kalousek about his attitude to the statement of Transparency International, in which the proposal for liquidation of environmental burdens through the only one big contract is criticized, as it set basis for corruption. Could you express your opinion?

Miroslav Kalousek, Minister of Finance: I would like to ask you for asking me that question. I will answer it, but I am not going to polemize publicly with an organization which misused state subsidies, never admitted this fact and avoided sanctions in a way which was typical for cigarette smugglers. Therefore, do not press me to make comments on the statement of Transparency International, I ignore their statement. But if you ask me that question, I will answer it.

Mirek Topolánek, Prime Minister of the CzechRepublic: I must say something on this issue, after all. I speak about it very openly and uncompromisingly during interpellations in the Chamber of Deputies. This state, which has been lingering here for ten years, is absolutely intolerable, and if somebody speaks about corruption, I would recommend him to review great majority of contracts on removal of environmental burdens which were derived from contracts of the National Property Fund. That state was intolerable and it had to be changed. Whatever the implementation of the contract will be like - in the way proposed by the government or not - it is quite apparent that the principle is opposite. While the existing interest was to increase the price so that everybody could have some revenue, the tendency of the licensee is opposite. The licensee will win because of the lowest offered price and it will be interested in effective and cheap implementation. It should also take the Czech Environmental Inspectorate into consideration as in case the inspection does not acknowledge the basic parameters of that decontamination, no financial means will be paid out. I must say that I am astonished by the fact that the "Transparent Internationale" shows such an attitude to the issue in which it should be on the side of the government.

Jana Bartošová, Government spokesperson: Thank you. I welcome the Minister of Interior Ivan Langer and I give him the floor.

Ivan Langer, Minister of Interior: Good afternoon, I would like to inform you on two issues which were debated and approved by the government today. The first one was a material which concerned the communication infrastructure of the public administration and information on results of the integrated approach in the framework of implementation of the communication infrastructure of the public administration. It was shown that the integrated approach is successful because of noticeable price economies and I can say that the state administration will spend on communication infrastructure by 20% less than it was in the last year. We estimate that the state will reach economies amounted to 500 million crowns during the term of validity of the master contract. The government also debated the material which concerned contractual relations with the company of Microsoft. I would like to inform you that the Ministry of Interior, based on the Competency Act, was responsible for information and communication technologies in the public administration; it was charged with a task to conclude a strategic contract on cooperation with Microsoft and also with other companies, because this contract is not and must not be an exclusive contract. The contract on the strategic cooperation with Microsoft was signed, and a similar contract was concluded with the company Novell this week on Monday. Based on the material which has been approved, I can say that the integrated approach was approved to the purchase of these products, which are indispensable for the Czech public administration. I think that thanks to tough negotiations with the representatives of Microsoft and with its new head, Mr. Ballmer, we reached an offer, which may brings, and now listen to me attentively, economies amounted to five billion and a half in the horizon of six years. That is all, thank you.

Jana Bartošová, Government spokesperson: Thank you. Does anybody have a question concerning this issue?

Ivan Langer, Minister of Interior: Just additional information – the Czech public administration will, in the combination of communication infrastructure and software product, reach economies amounted to one billion crowns annually. The annual economies will be one billion crowns.

Jana Bartošová, Government spokesperson: Thank you, good-bye.

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