Are you sure?

Government calculates effect of tax changes on budget revenue

Tax changes planned by the government will reshuffle HUF 128 billion in 2009 and HUF 740 billion in 2010, MTI learnt from government sources on Tuesday. The changes will have no effect on overall budget revenue in 2009, but they will cut revenue HUF 13 billion in 2010.

The reduction in payroll tax from 32% to 27% will result in an HUF 81 billion fall in budget revenue this year. The cut is planned to take effect from July and only on wages not exceeding the double of the minimum wage.

The elimination of the 4% “solidarity tax” for private individuals will cut budget revenue by HUF 10 billion, and changes to the personal income tax rates, bracket thresholds and tax exemptions will reduce it by HUF 35 billion this year.

Raising the main VAT rate from 20% to 23% will generate additional budget revenue of HUF 107 billion in 2009, and a rise in excise tax by 3%-7% will bring in an extra HUF 16 billion. Savings of HUF 5 billion will result from changes to universal social subsidies, such as the family support or the regular support, to be introduced from September 2009.

In 2010, the extension of the lower payroll tax to all employees will lower budget revenue HUF 302 billion.

The elimination of the solidarity tax for private individuals will shave off HUF 29 billion in 2010.

Additional changes to the personal income tax due next year will reduce budget revenue by HUF 196 billion and the scrapping of the solidarity tax for companies will cut it by HUF 208 billion.

The government calculates with eight different sources of additional budget revenue to counter the cuts in taxes and contributions in 2010. Among them are a three-fold increase of the rehabilitation tax, to generate HUF 21 billion, the elimination of tax exemptions on in-kind contributions (cafeteria items), to bring in HUF 215 billion, a scrapping of personal income tax preferences, to bring in HUF 3 billion, and a restructuring of universal subsidies, to generate HUF 30 billion.

By widening the tax base, the government expects to take in an additional HUF 73 billion in budget revenue next year. Raising the corporate tax rate from 18% to 19% will bring in HUF 97 billion more in 2009.

In 2010, the VAT increase will generate HUF 248 billion and the excise tax rise will bring in HUF 40 billion more. (MTI – Econews)