“Probably the main priority would be cutting social security contributions and I’d be inclined to cut employers” social security contributions if what you want to do is increase employment,” Christopher Heady from the Organization for Economic Co-Operation and Development’s told a conference. While in 2006 Hungary’s overall tax revenue as a percentage of GDP at 37.2% was only slightly above the OECD’s average of 36.2%, the country had the third highest tax wedge on single workers in the OECD. (Only Belgium and Germany had a higher tax wedge on a single taxpayer earning the average wage.)
In Hungary the share of social security contributions within total tax revenue is very high the OECD said. At the same time, personal income tax and corporate tax are relatively low as percentages of total tax revenue. In Hungary is no significant tax on real estate as for members of the OECD countries. If it reduces social contributions Hungary would have to make up for lost revenue either from higher income or property taxes, which would be politically unpopular; by hiking the top 20% value added tax rate, which also be deeply unpopular and inflationary, or by eliminating tax exemptions.
Experiences of state budgets, administrative and tax reforms in the OECD countries will be useful in Hungary, said Financial Minister János Veres after the conference. Hungary’s two coalition parties are sparring over a draft tax reform aimed at boosting economic growth. The Socialists, the biggest governing party, want to limit tax cuts, by contrast with the junior coalition party, SzDSz, who want bigger cuts and accuse the Socialists of fearing to reform spending. Plans are expected to be finalized in the next few weeks. (Gazdasági Rádió, Guardian)
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
