Hungary sees 2007 budget unaffected by court's ruling on tax

Banking

Hungary's government said the country's 2007 budget revenue won't be affected by a court decision that ruled a new tax illegal.

The Constitutional Court, Hungary's highest judiciary, yesterday said it struck down a plan to tax the money accounted by corporations as free cash. The government is looking for a way to make up for the missed receipts, according to a statement posted on the Finance Ministry's Web site. „The Constitutional Court's decision doesn't impact the budget planned for next year, submitted on October 31 and based on the Convergence Program as endorsed by the European Union,” the government said in the statement. Hungarian Prime Minister Ferenc Gyurcsány is raising taxes and cutting subsidies to slash the EU's widest budget deficit. The government says with this tax it also wanted to crack down on tax evasion, discouraging companies from avoiding payment by accounting profit as free cash. The government expected no income from the free tax next year and forecast revenue of Ft 5 billion (€19.1 million) next year. That compares with a shortfall budgeted at Ft 1.75 trillion for next year. (Bloomberg)

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