Czech government proposes unpopular cuts

PRAGUE (AP) — The Czech prime minister says his government is planning to increase taxes and make unpopular spending cuts due to the economic slowdown.

Petr Necas says the government will spend 23 billion koruna ($1.2 billion) less this year than planned in the budget.

Necas says that for 2013 and 2014, the government also wants to increase the sales tax on retail goods, possibly hike the income tax for the highest-earners and freeze pensions.

The measures, which Necas on Monday called "necessary," should help reduce the government budget deficit under 3 percent of GDP next year and completely eliminate the deficit by 2016.

Details still have to be worked out.

The export-oriented Czech economy slipped into recession last year and is expected to stagnate in 2012.

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