Czech president vetoes car scrapping scheme

CzechNews
9. 7. 2009 14:25
Giving people discount on cars is unfair for other industry sectors, Václav Klaus says.
President Václav Klaus
President Václav Klaus | Foto: Reuters

Prague - While the scrappage schemes have proved popular in the countries that have implemented them with the funds running out soon, Czech president vetoed some of the crisis stimulus package items, including the car-scraping bonus.

"It is a discriminatory bill, lacking any substance and there are numerous legislative errors. It is also not certain if such a bill would bring any positive effects," Klaus commented the whole set of measures, proposed by the former cabinet of Mirek Topolánek (Civic Democrats).

Under the scrappage scheme, as proposed by Social Democrats (ČSSD), Czech motorists who would trade in a car more than 11 years would receive a CZK 30,000 discount (roughly 1,200 eur).

But president Klaus finds only sharp words for such a step.

"This measure is discriminatory. Only few car industry firms would benefit from the scheme at the expense of other sectors and companies that do not have such a strong lobbying background," Klaus said.

Unclear effects

There are mixed messages from the car industries in the countries that have implemented the scrappage incentive schemes. Some say it helped to boost the sales but others warn that the schemes can over-heat the market and as soon as they end, car sales can plummet again.  

"This form of support deforms the market in terms of industries. It is a short-term measure the effect of which is very questionable. It cannot guarantee that Czech citizens will not use the bonus to buy a car abroad, for example," Klaus argued.

Former Finance Minister Miroslav Kalousek is of the same opinion.

"I was the most eloquent critic of the scrappage scheme," Kalousek said, adding that it was a deal with the Social Democrats for agreeing to tax deduction.

The package of laws is to be discussed by the lower house again. However, 101 MPs are needed to annul president's veto and in the pre-election times it will be difficult to achieve that.

 

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