ECONOMIC BRIEFS

Parliament finalises VAT increase and tobacco tax

Parliament on June 10 approved a measure to increase the lower VAT rate from 6 to 10% as of July 1, despite the efforts of some parties to exclude basic food items from the increase. Of 106 deputies present in the 150 seat chamber, 74 voted in favor of the bill, 27 were against, and 5 abstained.

The VAT increase was part of a recently-announced austerity package, and should bring an additional 2.9 - 3 billion crowns into the state budget in 1999. Parliament dealt with the bill in shortened legislative proceedings.

Deputies also passed a revision to the law on excise tax for tobacco and tobacco products, increasing the excise tax on cigarettes shorter than 70 mm from the current 0.35 to 0.45 crowns per pack, and from 0.05 crowns to 0.85 crowns per pack for king size cigarettes from July 1. This increase should bring an additional 400 million crowns into public coffers in 1999 if sales remain at current levels.

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