The Czech government yesterday presented a fiscal reform package intended to slash a growing budget deficit that threatens the country's hopes of joining the euro, while at the same time reducing income and corporate taxes and rationalising some social spending.

In order to make trimming the welfare state more palatable, the headline feature of the government's initiative is a plan to introduce a flat income tax rate of 15 per cent, compared to the current progressive system, where rates vary from 12 to 32 per cent.