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Analyst urges tax cuts to improve Hungary’s competitiveness

Cutting payroll and corporate taxes could improve Hungary’s competitiveness, and the resulting gap in budget revenue could be filled with the introduction of taxes on assets and a VAT increase, head of the Deloitte consultancy said.

A ten-percentage-point reduction in payroll taxes could save companies Ft 800 billion, and the elimination of the “solidarity tax,” introduced in 2006, would save a further Ft 200 billion, Péter Oszkó said.

The budget shortfall could be made up for with the introduction of a property tax and raising the main VAT rate to 23% from 20%. Though the main rate will rise, VAT on a special group of “price-sensitive” products might be lowered to 5%, he added.

Oszkó noted, that taxes and contributions are equivalent to 40% of Hungary’s GDP, well over the 29% rate in Slovakia and the 34% rate in Poland. (MTI – Econews)