Gov't payroll tax cuts to affect only small part of job-related costs - GKI

Banking

Planned cuts of employers' payroll taxes, announced as part of a government action plan to boost employment on Monday, affect only a small part of labor-related cost for businesses, Judit Ádler, head of employment policy research of economic research institute GKI told MTI on Tuesday.

Tax preferences aimed at boosting employment in disadvantage age or social groups in recent years had only moderate success in creating new jobs, Ádler added.
Workers hired at lower tax rates could take the place over from those who are eligible for no benefits, the analyst said. GKI estimated that labor-related expenses amount on average to about one-fifth of all company expenditures in Hungary, and wage makes up 60% and the related taxes and contributions 40% of labor costs.
Among other measures, the government aims to halve employers' so-called social contribution tax payable on wages of those under 25, more than 55 years old and on all unskilled employees as part of the action plan.
Ádler added that it is still unclear whether the payroll tax cuts are valid for those already hired or apply only on new employees. While agreeing with the focus of the measures she said the package requires fine-tuning.

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