By Jan Lopatka
PRAGUE, Sept 1 (Reuters) - Czechs must get ready to slash
government spending and dish out more in taxes if the country is
to avoid the kind of financial collapse that has swept Hungary
and the Baltics, the chief of a new Czech party said.
Karel Schwarzenberg, a popular former foreign minister and
head of the new conservative TOP 09 party which may shake up the
balance of power in parliament after next month's election, told
Reuters it was time to admit the scope of the crisis and the
need to tighten belts.
The Czech Republic faces a budget deficit soaring to more
than 7 percent of gross domestic product next year due to the
downturn, which has exposed a long-term trend of eroding state
finances that had been masked by years of fast economic growth.
With the election coming up on Oct. 9-10, politicians from
the main parties have refused to support tax hikes and cuts
advocated by an interim cabinet that has ruled since the March
fall of a centre-right administration in which Schwarzenberg was
foreign minister.
"If our political leaders do not have the courage, if we
keep throwing money around as if nothing is going on, we could
reach the state of Hungary or the Baltics," Schwarzenberg said.
"We have to, above all, radically cut expenditure but
probably we will not get by without growth in some taxes. And we
will have to work harder. Period. We have no other option."
No party is expected to win an outright majority in the
October election, and a strong showing by TOP 09 could help tip
the scales in favour of a centre-right coalition.
"THINGS WILL BE WORSE"
The 71-year-old pipe-smoking ex-minister, who lived most of
his life in Austrian exile and supported Czech anti-Communist
dissidents in the 1980s, said he would be happy to win more than
10 percent of the vote.
Latest opinion polls put support for TOP 09 at 6.8-9.5
percent. They showed leftist parties led by the Social Democrats
slightly ahead of right-wing forces, but support for individual
parties has fluctuated. []
Schwarzenberg, from an aristocratic family that owns estates
in the Czech Republic and Austria, has won popularity for his
frank talk despite basing his new group on promoting changes
that would hurt people's incomes in the short run.
The party advocates cuts in welfare, higher payments for
non-urgent health care, pension reforms, a 20 percent cut in
current government spending and introduction of school fees.
"It is totally clear to us that we have to brace for a time
when things will be worse, in healthcare, in pensions," he said.
Schwarzenberg said he backed the non-partisan Finance
Minister Janota in his plans to hike taxes and cut spending,
although other political leaders have shunned the plan.
"Janota is right ... the budgets for the next two years
should be cut without mercy."
The interim government said on Monday it would propose a
package of budget savings ahead of the election despite
politicians' reluctance to sign up to cuts now. [].
TOP 09 supports quick euro adoption, and targets 2014 as the
first possible entry date.
(Editing by Andrew Roche)
