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Economist: Hungary in chaos

Hungary, which used to be a wonder child of the region, is lagging behind, its government is played by the opposition, the economy is in a state of sclerosis and the people are angry, business weekly The Economist wrote in an analysis.

The periodical reminds readers, that more than 80% of the people who cast their vote at the March referendum said no to the visit fee, the hospital daily fee and the tuition fee. Following poverty and the life-long tradition of a “caring state,” Hungarians are not ready to directly pay for services they have already financed by their taxes, the analysis said. Hungary’s tax burdens are the highest in the region, but only 20% of employees pay about 80% of all personal income taxes. Employers pay a social security contribution of more than 30% above taxes for each employee and tax laws keep changing each year, the analysis said.

Even Romania and Slovakia look more attractive with their single-key tax system than Hungary, The Economist reported. The current account deficit declined from 9.4% in 2006 to 5.6% in 2007 and may keep dropping this year, however, hopes of further reforms have vanished after the referendum, The Economist said. Hungarian politicians do not care about structural reforms and while Slovakia may enter the euro zone next year, Hungary may join in 2014 earliest, the analysis said. (read full article) (Gazdasági Rádió)