Prague stock exchange warns government against rattling markets like UK
PRAGUE, Oct 21 (Reuters) – Czech politicians should avoid shaking markets like Britain did recently as the country discusses a proposed windfall tax, the head of the Czech Republic said on Friday. the Prague Stock Exchange, after comments from members of the ruling party this week rattled stocks.
The Czech government has been discussing since the summer to impose an exceptional tax on excessive profits in the energy and banking sectors, which weighs on the markets. The Department of Finance has proposed that the charge apply to income between 2023 and 2025.
On Wednesday, however, some junior ruling party officials said the five-party coalition had also agreed to include 2022 profits, which rattled investors before the government later clarified it was still aiming for a departure. in 2023.
Electricity producer CEZ (CEZP.PR) fell more than 6% at one point on Wednesday and lost 17.5 billion crowns ($700 million) in market capitalization that day, closing at a low of 11 months. But since then, the stock has jumped nearly 10%.
“Trust is the fundamental value that every capital market seeks in its investors,” Prague Stock Exchange President Petr Koblic wrote in a commentary to the financial daily Hospodarske Noviny.
“Let’s not repeat the mistakes of Britain, which has played with this confidence in recent days – and it has cost the country billions.”
On Thursday, Liz Truss resigned after the shortest and most chaotic tenure of any British prime minister, expelled after trying to introduce a radical economic program, hammering the country’s reputation for financial stability.
Czech banking stocks were also hit on Wednesday, although they too recouped their losses.
Finance Minister Zbynek Stanjura said applying a one-off tax from 2023 was the safest option, although a start in 2022 was legally possible.
He told Seznam Zpravy on Friday that the goal of starting in 2023 still stands. “What the coalition partners said was more of a miscommunication,” Stanjura said in an interview for the news site.
On Thursday, Prime Minister Petr Fiala also criticized poor communication.
The Czech government is introducing an exceptional tax to finance measures such as a cap on electricity prices, aimed at mitigating the impact of the energy crisis in Europe on its citizens.
($1 = 25.0650 Czech crowns)
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Reporting by Jason Hovet and Robert Muller; Editing by Hugh Lawson
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