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Everybody says tax level is too high

The government submitted yesterday its proposals to extend the tax base and include groups previously omitted.

The number of tax payers is very low today: 4.3 million people prepare personal tax return but only 3 million of them pay tax; out of the 315,000 joint ventures 118,000 are loss making and 16,000 pay zero tax; 210 thousand of 321,000 private entrepreneurs are non-payers said Finance Minister, János Veres.

According to Csaba László, former Finance Minister, it is not only that too few people pay too much tax, but Hungary goes against the European tends of tax reduction, and tax levels are too high. The Hungarian proportion of the revenue within the GDP is 38.6%, which is behind the 40.9% average of the EU 25. It is the employers’ contribution and the additional taxes of entrepreneurs that could be best reduced, and the local tax should be replaced by a new kind of tax, in the future, opined László.

He further suggested raising VAT from 22% to 23%, and the introduction of value-based real estate tax. In his opinion, the partial merger of local and central tax authorities is worth considering too: while APEH collects the annual revenue of Ft 8,000 billion with its 15,000 employees, local governments gather Ft 600 billion with 11,000 workers. (Napi Gadaság, Gazdasági Rádió)