By challenging the proposal on how to tax the rich before fall elections by Czech Prime Minister Bohuslav Sobotka, Czech billionaire Finance Minister Andrej Babis took aim against his governing partner.

Cutting down of income tax for earners with monthly salaries of less than 113,000 koruna ($4,417) and keeping up levies for everyone else unchanged has been vowed to be done by Babis, whose ANO party leads opinion polls ahead of this fall’s parliamentary ballot.

Calling it “a question of solidarity”, Sobotka had pledged to boost taxes for anyone making more than 50,000 koruna a month to a top bracket of 32 percent and has also vowed to cut taxes for most Czechs and the most recent of the proposal is a riposte to one presented last week by Sobotka.

When health care and pension contributions are included, the tax burden for top earners would be increased to more than 40 percent according to the premier’s plan. But a debate in the former communist country over how to define “rich” and represents a swing to the left by his Social Democratic Party has been sparked by the salary threshold for his top bracket, at about $2,000 a month. With a “solidarity” tax of 7 percent on any income that exceeds the annual average by 400 percent, Czech income tax is now a flat rate of 15 percent.

“I don’t think it’s a good idea, as proposed by the Social Democrats, to penalize people with income over 50,000 koruna” a month, Babis told the party congress. He was re-elected by the party as chairman. But after the prime minister pledged to raise taxes on companies making more than 100 million koruna in net income a year, he also rejected a plan by Sobotka to impose special taxes on certain industries.

Sobotka and Babis have clashed on a wide array of issues, including potential conflicts of interests among politicians who own businesses and the state’s role in the economy even while their Bottom of Form

ruling coalition has survived longer than any of the previous eight Czech administrations in the past 15 years. And as the chemical and agricultural tycoon’s lead in polls has widened, their squabbles have only increased.

As anti-establishment parties ride a global populist tide that has sown upheaval through the rise to power of Donald Trump and the U.K.’s vote to leave the European Union, the Czechs will vote this fall, following elections in Germany and France.

According to a Jan. 26 poll by Stem, Babis’s ANO had 30 percent support among voters, versus half of that for Sobotka’s party and he has been echoing the U.S. president by calling traditional political parties corrupt and ineffective.

(Adapted from Bloomberg)

Categories: Economy & Finance, Geopolitics, Uncategorized