* Corporate tax at 19 percent
* Plans to keep dividend tax intact
* Says has other ways to avoid double taxation, no details
(Adds background, details)
By Robert Mueller
PRAGUE, March 10 (Reuters) - Czech Finance Minister Miroslav
Kalousek said on Thursday that a tax overhaul to be unveiled
next week would keep the corporate tax rate unchanged, maintain
the dividend tax and find a way to avoid double taxation.
The Finance Ministry plans to introduce broad reforms on
March 17 to simplify the tax system and curb tax evasion.
The centre-right government has pledged not to raise overall
taxation and to reduce the budget deficit via spending cuts.
But it has since proposed to raise the lower rate of value
added tax rate (VAT) to finance a pension reform, angering the
public and some officials including President Vaclav Klaus.
Media also reported a preliminary plan to raise the
corporate tax rate by 1 percentage point to 20 percent, in line
with the upper rate of VAT.
"If my proposal is approved, it (the tax rate) for
corporations will stay the same," Kalousek said.
He said personal income tax will fall slightly, after the
current 'super-gross salary' scheme, which taxes individuals'
wages including social and health taxes paid by employers, is
cancelled.
Kalousek will not propose to scrap the country's tax on
dividends, contrary to reports in Czech media, he said.
Scrapping the tax was one option to avoid double taxation
for companies but Kalousek said he preferred other methods,
without giving details.
"I will not propose scrapping the dividend tax but I will
find another mechanism to remove double taxation," he said.
Companies currently pay 19 percent corporate tax on their
profits and an additional 15 percent tax on dividends.
The government is under fire for its plan to finance pension
reform by effectively abolishing the 10 percent lower rate of
VAT from October.
Critics point to its promise not to raise overall taxation,
and to the fact the tax increase will bring more funds into
state coffers than is needed to finance the reform.
[]
Prime Minster Petr Necas has said the higher tax will be
offset by a number of measures, including lower social tax
ceilings, cuts in social levies paid by corporations and some
tax simplifications.
But the three coalition parties are yet to find a firm
agreement on the VAT change, which would raise the lower rate to
match the current top rate of 20 percent. Junior coalition
partner Public Affairs and conservative TOP 09 propose various
exemptions and different tax rates.
Tax revenue makes up around 80 percent of the Czech state's
budget income and around 70 percent of overall spending.
Government plans see a budget deficit of 4.6 percent of GDP
this year, down from an estimated 4.8 percent in 2010. Kalousek
repeated his view that the deficit may be lower this year than
forecast.
(Reporting by Robert Mueller, writing by Jana Mlcochova;
editing by Catherine Evans)
