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Economic ministry sees minimum wage hike and extra tax for high earners

The Ministry of National Economy will propose raising the minimum wage to HUF 92,000 per month from the present 78,000, and the guaranteed wage minimum for skilled workers to HUF 108,000 from HUF 94,000, the ministry said in a statement on Tuesday.

This is to neutralize any harm the tax system reform, i.e. the introduction of the flat rate personal income tax system may cause to employees, the statement explained, adding that the government will do "whatever it can" to prevent any loss of income for employees.

The government intends to maintain the compensation system in the public services which will guarantee that no one's net income could fall next year, and for the private sector the government will propose an average 5% wage hike with a possibility that the government might cover part of employers' losses resulting from a higher than 5% raise.

Those employees who might lose some income after all can count on the help of the National Tax and Customs Office in terms of compensation, the ministry added.

The cost of these measures will be financed by a temporary extra personal income tax which high earners should pay on the part of their monthly gross income above HUF 202,000, the ministry said without further elaborating on the expected rate of the extra tax.