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Government to fund action plan to save jobs, help small businesses from financial transaction duty - PM

Banking

In order to save jobs, the Government wants to halve employers' payroll taxes on wages of employees less than 25 years old, more than 55 years old and all unskilled employees between 25-54 years old, Prime Minister Viktor Orbán told parliament on Monday.

The measure, which would make the employment of about 250,000 people easier, is part of an action plan to be financed from the financial transaction duty, he said.

To help entrepreneurs with less than HUF 6 million annual revenue, they will be able to choose an all-in-one umbrella tax of HUF 50,000 if the enterprise is the sole source of revenue of its operator, or HUF 25,000 for those who operate their small enterprise beside a permanent employment. This tax will replace company tax, personal income tax, social levies and taxes as far as the enterprise is concerned, the prime minister said.

Entrepreneurs who employ less than 25 people could also choose to pay a 16% small company tax instead of general corporate tax and payroll taxes. This option could affect about 300,000 small companies employing more than 800,000 people, the Prime Minister said.

Those employing long-term unemployed would pay no payroll tax on them in the first two yar and only half of the standard tax in the third year.

Orbán thanked Minister of National Economy György Matolcsy, the parliamentary group of the governing Fidesz-KDNP and the economic committee of the parliament for finding a solution by which the planned financial transaction duty will provide the fiscal resources for the job saving action plan.

Matolcsy said last Thursday the plan would cost HUF 300 billion next year and would be HUF 100 billion-100 billion financed from extending the financial transaction duty to the National Bank of Hungary and to the State Treasury. The last HUF 100 billion would come from budget reserves which would, however, be replenished in the course of 2013 from the savings on dropping interest expenses, as a result of the prospective IMF/EU assistance program, he said.

Orbán also said that the lifting of sanctions on Hungary was a "victory". "Our road differs from that of Europe, but it turned out that our road is negotiable for us and successful", the prime minister added.

EU finance ministers on June 22 lifted a partial suspension of Hungary's Cohesion Fund allocation introduced as part of the excessive deficit procedure, acknowledging that "Hungary has taken measures to correct its excessive government deficit by 2012", but noted that the country's excessive deficit procedure nevertheless remained open. The suspension affected €495m, or 29 percent, of Hungary's catch-up funding for 2013. The ministers approved the suspension in March after Hungary failed to take sufficient measures to plug its budget gap.

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