Finance Minister Péter Oszkó presented a package of tax changes for 2010 that will lower the payroll tax, corporate profit tax and personal income tax, while raising the excise tax and introducing a luxury tax.
The government will lower the payroll tax to 27% from 32% on all wages, causing the tax wedge to narrow to 46% from 54%, Oszkó said. (The payroll tax will be reduced to 27% on wages up to twice the minimum wage already from July 1, 2009.)
The government wants to levy a preferential 32% tax on in-kind contributions by employers, such as hot meal vouchers, but the final decision on the matter will not be made until a meeting with employers and unions on Friday, he said.
The corporate tax will be raised to 19% from 16%, but the 4% “solidarity tax” will be eliminated, resulting in an overall one-percentage-point fall in the tax rate for company profit.
The personal income tax rate for the lower bracket will fall to 17% from 18% and the rate on the upper bracket will drop to 32% from 36%. The threshold between the two brackets will rise to HUF 5 million from HUF 1.9 million.
The tax base for the PIT will be widened to include payroll tax paid by employers.
The 4% solidarity tax for high earners will be scrapped.
The excise tax will be raised by 9.7% for cigarettes, by 10% for alcoholic drinks, by 7.2% for diesel and by 10% for petrol.
The government will introduce a 0.35% luxury tax on real estate and vehicles worth more than HUF 30 million, and a 0.50% tax on such assets worth more than HUF 50 million. Families may deduct 15% of the tax after their third child, and another 15% for each child after that. Pensioners whose income does not exceed twice the minimum pension and whose tax base is not more than HUF 10 million are exempt from the tax, if the value of their property -- in which they must reside -- is under HUF 50 million. If pensioners are unable to pay the tax, it will be recorded on the deed to their home and paid by their heirs.
Oszkó noted that a property tax of an average annual HUF 15,000 per home is already paid to local councils by 45% of homeowners in Hungary. Taxpayers will be allowed to deduct this tax from the new tax, which will affect between 200,000 and 250,000 pieces of real estate, he added.
The owners of the assets will bear the responsibility of paying the luxury tax, to be collected by APEH.
The government plans to eliminate several small taxes, such as the culture tax, the fixed healthcare tax, Oszkó said. This does not mean spending for these aims will be reduced, rather they will be supported from the budget, he added.
The Local Business Tax, will be collected by APEH from 2010, instead of by local councils, although local councils will still get the revenue and determine the type and size of the tax.
The size of duties will be reduced to 4% on average, with private individuals paying either 2% or 4%, Oszkó said.
The government will introduce a 30% withholding tax on money going to tax havens. (MTI-Econews)