UPDATE - Govt may levy ‘accident tax’ - Origo

Hungary's government could levy a 30pc tax on accidents to be paid by motorists and collected by insurers, a draft of tax plans for 2012 obtained by internet portal Origo shows.

The base for the tax would be motorists' annual mandatory vehicle insurance premium, under the draft of legislation to be submitted to Parliament on Friday, Origo said. The tax is expected to generate HUF 27bn in 2012, an amount which would be paid into the Health Insurance Fund.

The government also wants to make changes to the tax on unhealthy foods, raising the tax on sugary soft drinks to HUF 7 per liter from HUF 5, the tax on sugary snacks to HUF 150 per kg from HUF 100, and the tax on salty snacks and food seasonings to HUF 250 per kg from HUF 200. The tax will also be levied on flavored beer (HUF 35 per liter), alcoholic refreshments (HUF 100 per liter) and coffee (HUF 250 per kg). The changes are expected to generate additional budget revenue of HUF 15bn.

The draft legislation does not clarify how the government plans to compensate low earners who are worse off because of the elimination of tax preferences and the introduction of a flat-rate personal income tax.

In a statement reacting to the Origo piece published late Friday, the National Economy Ministry said tax on unhealthy food would not apply to coffee in future and the government would propose a HUF 20 per litre tax on flavoured beer and alcoholic refreshments.

The ministry said insurers would not bear the risk of collecting the accident tax.