ADVERTISEMENT

Yielding ground on flat-rate tax would be difficult, Varga says

Banking

Hungary's government would be able to yield ground on the country's flat-rate tax with difficulty at negotiations for financial assistance from the International Monetary Fund and the European Union, minister without portfolio Mihály Varga said in an interview on public television late Monday.

"I don't see too much room for manoeuvre on the matter of the flat-rate tax, but obviously we will listen to what the problem, what the objection to this tax system is," Varga, who is Hungary's chief negotiator at talks with the IMF and EU, said on m1's Az Este program.

He noted that the flat-rate 16% proportional tax would be in place in a "pure form" for the first time form 2013, following a three-year transitional period. Eliminating entirely the practice of adding payroll contributions to the personal income tax base may reduce tax revenue, but it could support economic growth as the extra money is used for consumption or investments, he added.

Asked whether the government would refuse to introduce a tax on real estate or assets if asked by the IMF, Varga said if such questions come up, the government will review them, but he added that it was more than certain that the answer would be no for the time being.

The Hungarian economy is on a path on which the aim is to implement tax cuts, not tax increases, he said.

Varga said questions to clarify the financial transactions duty were sure to come up at talks with the IMF and EU, but he added that the duty did not hurt the central bank's independence.

The duty, approved by Parliament on Monday, applies to some central bank transactions. The independence of Hungary's central bank was a key issue in preparations for negotiations on the precautionary financial assistance from the IMF and EU.

ADVERTISEMENT

IMF raises Hungary 2021 GDP growth forecast to 7.6% Analysis

IMF raises Hungary 2021 GDP growth forecast to 7.6%

Parliament approves amendment to Competition Act Parliament

Parliament approves amendment to Competition Act

New CEO announced at Codic Hungary Appointments

New CEO announced at Codic Hungary

Budapest bike-sharing scheme boasts record ridership City

Budapest bike-sharing scheme boasts record ridership

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 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.