Czech PM announces government resignation as rival faces tax questions

The Czech prime minister has said his government will resign over unexplained business dealings of his finance minister and rival.

Premier Bohuslav Sobotka said he will meet President Milos Zeman this week to formally submit the government's resignation.

The move reflects tensions in the ruling coalition about six months before the parliamentary election.

Mr Sobotka says there are suspicions that finance minister Andrej Babis avoided paying taxes in the past and did not explain properly.

Mr Babis, the country's second-richest businessman, heads a centrist movement that is favourite to win October's ballot, paving the way for him to become prime minister.

Mr Sobotka's Social Democrats are a distant second.

Premier Bohuslav Sobotka

Doubts have surfaced about how Mr Babis gained his wealth. He has previously denied any wrongdoing.

Mr Sobotka said it would be an option to fire him but that would mean his rival would be given extra time to campaign ahead of the vote.

"That's the reason I'm opting for the only reasonable solution which is available, and that's the government's resignation," he said during a hastily organised news conference.

"A trust of the public in politics is at stake."

The premier said the move will give the coalition a chance to form a government again, but without Mr Babis. Another option is for parliament to call early elections.

The president plays a key role in a crisis like this because he has a right to select a new prime minister.

Mr Babis's centrist movement came in a surprise second in 2013 parliamentary elections with an-anti corruption message

The billionaire is sometimes dubbed the "Czech Berlusconi" a comparison to Silvio Berlusconi, the Italian media tycoon who until recent years dominated his nation's politics.

AP