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Parliament approves Job Protection Plan measures

Banking

Hungary's Parliament approved late Monday amendments that are part of a Job Protection Plan intended to reduce the burden of employers and improve the environment for doing business in Hungary.

The bill, submitted by National Economy Ministry György Matolcsy, was approved with a vote of 298 ayes, six nays and 40 abstentions. The legislation introduces reduced social contributions for employers who hire people under 25 or over 55 years of age, mothers returning to work after child-leave and the long-term unemployed. It exempts employers from social contributions for career-starters under 25 for two years on gross wages up to HUF 100,000 a month.
Parliament also approved on Monday legislation that establishes an "itemised" flat tax for sole proprietorships and limited partnerships. Those who opt to pay the tax are exempt from personal income tax and dividend tax. The itemised tax replaces corporate tax, healthcare, social and training contributions. The legislation also establishes a 16% flat-rate tax for small businesses whose revenue does not exceed an annual HUF 500 million.
The National Bank of Hungary recently estimated that measures taken as part of the Job Protection Plan would have a HUF 243 billion negative impact on the 2013 budget. The central bank's staff also said that the plan would "considerably reduce the costs of employment of the employees concerned, softening the impact of weak economic activity on employment". They added that private sector employment is expected to "increase slightly" in 2013 after a slight decline in 2012.

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