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Parliament to vote on HUF 300 bln job-saving action plan in September, official says

Banking

Hungary's Parliament could pass a HUF 300 billion job-saving and employment boosting package in September; Ádám Balog, National Economy Ministry deputy state secretary told MTI on Wednesday.

Prime Minister Viktor Orbán on Monday announced plans to cut taxes and red tape for small companies and employers who take on under-25s, seniors or unskilled workers, to be financed from the transaction duty.

The affected businesses will save about HUF 100 billion-150 billion on the preferential labor-related taxes to be introduced on employment of the young, near-retirement age and unskilled people, Balog said.

Another HUF 150 billion-200 billion of the programs' expenses will come from the planned new simplified taxes, he said.

These new taxes include one flat tax of HUF 50,000 a month on those employed full-time and HUF 25,000 a month for part-time employees replacing the corporate tax, personal income tax, payroll taxes including the social contribution tax offered to businesses with annual revenue below HUF 6 billion. Another option is a 16% flat rate payable on profit plus wage cost for those employing less than 25.

Businesses will have the option to switch to the above new taxes.

The existing simplified taxes, including the EVA for small businesses, which replaces not only the above taxes but also VAT, will prevail, but could be phased out if businesses consider them obsolete, Balog said.

A further option available for specified businesses will be the choice of a cashflow-based VAT accounting. This will allow businesses to pay in VAT only after they received payment for their services, if they undertake to act similarly in case of purchases.

Balog said the program would support both the saving of existing jobs and the creation of new ones when asked about the focus of the measures.

The measures could affect about 200,000 people of under 25 years old, and about 500,000 people over 55, the ministry calculated. The employment rate is 18pc among those under 25 and is 36% among those above 55, Balog said noting that both ratios are under not only the respective EU averages but are also below those in the region.

The ministry has made detailed projection and assessed realistically the cost of the program, Balog said when asked whether there was a way for an overshoot if costs of the program exceed the HUF 300 billion limit.

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