Centre-right coalition parties led by Civic democrats (ODS–Civic Democrats, KDU-CSL–Christian Democrats and the SZ-Greens) signed coalition contract yesterday. The program among others includes flat tax (corporate and personal in the range of 15-19%), stability of public finances and unemployment reduction. The coalition should cancel taxes on dividends and capital gains and abolish rent regulation. The program also plans to maintain current mining limits and no nuclear energy development.
The opposing Social Democrats said that they will not support the program in this form unless their own program in incorporated in it, which is highly unlikely (i.e. no flat tax, no privatization, state-owned hospitals only, etc). Note that the coalition parties need to win the vote of confidence by 101 vote while they have only 100 mandates. The coalition parties said they will hold talks with CSSD until Thursday (June 29). Note that there are three attempts to win confidence in the Parliament; no date has yet been set. The first constitution meeting of new Parliament is today (June 27).
Our view: We do not expect CSSD together with the Communist to give the vote of confidence to the centre-right coalition despite the coalition relying on at least one vote from the opposition (CSSD&Communists). We see a grand-coalition between CSSD&ODS or CSSD’s support of a minority Government (ODS) as more likely while early elections as the least likely scenario.