PRAGUE (Reuters) - Czech ruling party officials voiced guarded optimism on Tuesday the center-right cabinet would survive a parliamentary confidence vote despite threats by rebel deputies to bring it down over a plan to raise taxes.
Prime Minister Petr Necas is struggling to keep afloat his cabinet, unpopular due to two years of austerity policies and a series of graft scandals, after defections wiped away his three-party coalition's parliamentary majority.
The government's focus on austerity has brought debt costs to an all-time low but also depressed domestic demand in an economy that has been in recession since late 2011, the worst performance in central Europe.
The lower house is due to vote on Wednesday on the cabinet's plan to hike value-added, income and other taxes to cut the budget deficit below 3 percent of gross domestic product next year, a move that sparked a rift in the government camp.
Necas paired the tax vote with a vote of confidence, which means a failure would lead to the cabinet's resignation.
Senior officials in Necas's Civic Democratic Party said they would hold talks with the handful of rebel deputies to secure support for the cabinet, which is backed by only 99 seats in the 200-seat lower house, including the rebellious faction.
BETTER MOOD
The government might also get support from former coalition deputies who have left the government ranks, said Zbynek Stanjura, head of the Civic Democrat parliamentary faction.
"We will be glad if some other deputies support the government ... many of those who are in opposition now had earlier voted for the cabinet's agenda," he said.
Some of the rebels have indicated they are ready for a compromise, and the mood ahead of the vote has improved compared with last week, party officials said.
"I'd say it can turn out well," one Civic Democrat deputy told Reuters. Another party source said he was "slightly optimistic".
One opposition deputy from the centrist Public Affairs, a party that split from the ruling coalition in spring, said on Tuesday he would support the cabinet. Sources from the government parties said others might join him.
The government needs a simple majority of deputies in attendance to win the vote on Wednesday, making it easier for Necas than if he needed an absolute majority, or 101 votes.
Deputies have proposed a series of amendments to the tax bill, which should bring 22 billion crowns ($1.11 billion) in new revenue next year, and its final wording is uncertain.
Some amendments, preferred by the rebellious deputies, would take out most of the tax hikes. That could result in the bill being approved and the government surviving, but with tax plans far short of what it wanted.
That would not go down well with a junior coalition party, the conservative TOP09. Petr Gazdik, leader of its parliamentary faction, said on Tuesday the party might quit the government if that happens, but keep supporting it by votes in parliament.
If approved by the lower house, the tax bill is likely to be sent back by the upper house, dominated by left-wing opposition. To override its veto, Necas would need at least 101 votes, sparking a new search for a majority.
(Writing by Jan Lopatka; editing by Andrew Roche)
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