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President Václav Klaus on Friday signed into law government legislation that raises the two VAT rates by one percentage point to 15 and 21 percent, respectively. The legislation comes into force on January 1. The package also includes a seven-percent hike in income tax for high earners and cancels tax brakes for economically active retired people. The Czech government based the state budget for 2013 on revenues from the tax hikes; Mr Klaus signed it into law despite his objections; earlier this year he said raising taxes at a time of recession was an “economic suicide”. Analysts estimate that on average, the hikes will cost Czech families around 1,000 crowns each year.

President Klaus has temporarily put Prime Minister Petr Nečas in charge of the defence ministry. The move comes a day after Karolína Peake’s of the LIDEM party, from the post. Mr Nečas on Friday reinstated Vlastimil Picek to the position of first deputy minister; he said Mr Picek’s sacking by Ms Peake last week was a demonstration of “irresponsible dilettantism”, and said it was one of the reasons behind Ms Peake’s demise, after only eight days at the ministry.

The senior ruling Civic Democrats want to approach the coalition LIDEM group to discuss ways of saving the current government. After a meeting of Civic Democrat leadership on Friday, Prime Minister Petr Nečas said negotiations with the LIDEM party could start early next month. Mr Nečas also said party leadership backed his decision to dismiss LIDEM leader Karolína Peake from the post of the defence minister, a move that triggered the latest government crisis. In a reaction to Ms Peake’s dismissal, the LIDEM party called on its two other government ministers to step down as of January 10.

In related news, chairwoman of the LIDEM group Karolína Peake told the news website lidovky.cz on Friday her party had no interest in remaining part of the coalition. Ms Peake said the prime minister should have thought about the government’s future earlier when there was still time for negotiations, adding no cooperation with the Civic Democrats was possible in the current format.

Reacting to the tension among coalition parties, the opposition Social Democrats on Friday called on Prime Minister Petr Nečas to initiate a vote of confidence in his government in the lower house. Social Democrat leader Bohuslav Sobotka said if Mr Nečas refuses to do so, his party would try and instigate a vote of no-confidence, a plan supported by another opposition group, Public Affairs. Meanwhile, the Communists have asked for government to step down and early elections be held in the earlier possible term.

Some of the nine presidential candidates will suspend their campaigns during the Christmas holidays, the news agency ČTK reported on Friday. The frontrunner, Jan Fischer, said people should have some time off politics during the upcoming holiday season while Foreign Minster Karel Schwarzenberg will spend Christmas with his family and will resume campaigning in the New Year. Independent candidate Táňa Fischerová said Christmas was a spiritual holiday with no room for politics. Jana Bobošíková and Vladimír Franz also said they would suspend their campaigns until next month.

The Czech Telecommunications Institute will take more steps to regulate the country’s mobile services market, the institute said in a press release on Friday. The regulator found little competition on the market and said the four existing operators acted co-ordinately to keep up relatively high prices for mobile calling and other services. The institute wants to facilitate the entry of so-called virtual operators on the market, and is planning to introduce stricter regulation of whole-sale prices. A spokesman for Telefónica O2, the largest mobile operator in the country, said the firm would respect any decision by the regulator but said its assumptions were ungrounded as prices for private end users had decreased by nearly 40 percent of the last five years.

Russian and German tourists coming to the Czech Republic support some 50,000 jobs in the local tourist industry, suggests a new survey by the firm Mag Consulting released on Friday. That accounts for more than 20 percent of jobs in the industry. Germans represent the largest group of tourists in the country; each year, around 1.4 million Germans visit the Czech Republic. The second highest number of tourists – around 700,000 – comes from Russia.

The Schmallenberg virus, which causes birth defects and miscarriages in livestock has been for the first time detected in the Czech Republic, Czech Radio reported on Friday. The virus was found at two sheep farms in western Bohemia near the border with Germany. A spokesman for the Czech veterinary authority said the virus was only detected with sheep and not cows and other cattle.

Some 30 percent of Czechs believe in God, according to a new poll by the STEM agency. The survey suggests a 2-percent decrease compared to last year while in 1995, when the agency carried out first such poll, some 39 percent of those who took part said they believed in God. Some 34 percent of people said they were planning to visit a church during Christmas.