Czech lawmakers approve higher 2022 budget gap, overriding president's objection

PRAGUE (Reuters) - Czech lower house lawmakers approved raising the 2022 budget deficit by a third on Tuesday, overriding the president's objection to the amendment, as the government spends to ease the burden of soaring energy prices on households and businesses.

President Milos Zeman objected to the lack of plans to roll back a record income tax cut from 2020 and sent the government's budget amendment back to the house on Nov. 3.

The deficit is set to rise to 375 billion crowns ($16.04 billion) this year, the second highest gap on record after a 420 billion crown shortfall in 2021.

Zeman said the reduced income tax caused a shortfall of 90 billion crowns in the budget.

The centre-right government of Prime Minister Petr Fiala, though, holds a comfortable majority in the lower house and again approved the budget change.

The tax cut had originally been intended to last only two years but was approved by lawmakers two years ago with an open-ended date.

Parties from the ruling coalition, in power since the end of 2021, had backed the cut, and the Fiala's Civic Democrat (ODS) party has pledged not to raise taxes.

The amended 2022 budget includes measures such as energy price caps to aid people hurt by soaring electricity prices in the wake of Russia's invasion of Ukraine.

The finance ministry forecasts the fiscal sector gap to ease to 4.6% of gross domestic product this year, from 5.1% in 2021, before falling below the European Union-mandated ceiling of 3% in 2024.

($1 = 23.3730 Czech crowns)

(Writing by Jason Hovet; Editing by Emelia Sithole-Matarise)