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Flat tax to stay, tax morale must improve, PM tells President

The Hungarian government will cement its flat tax regime in 2012 and continue to cut public debt, Prime Minister Viktor Orban told a press conference after meeting President Pal Schmitt on Friday, reports online portal Readldeal.hu.

"Hungary will defeat the crisis," Orban said, adding that the multiple-rate tax system had been unfavourable to labour and played a key part in taking the country to the brink.

Orban said he and Schmitt had talked about the problem of tax evasion and fraud, especially regarding value-added-tax (VAT).

"Hungarian entrepreneurs have yet to become diligent tax payers in return for the government's significant tax cuts for businesses," Orban said.

He added that tax authorities must "perform better in this area". Schmitt agreed that tax morale was essential.

The government will take steps to help the most vulnerable groups of society, the prime minister said. He added that the president expects measures to be drawn up targeting the poor, the unemployed and those indebted in foreign currencies and facing default.

Orban said these measures could be put to parliament in the autumn session.