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Gov't could lower threshold for luxury tax in case of multiple properties

The government could lower the value threshold for the planned luxury tax on real estate if Hungarians own more than one high-value piece of property, Finance Minister Péter Oszkó said.

The government plans to introduce, from 2010, a 0.35% luxury tax on real estate and vehicles worth more than HUF 30 million, and a 0.50% tax on such assets worth more than HUF 50 million.

The HUF 30 million value threshold for private individuals who pay the tax on one piece of real estate could be lowered for any second property to HUF 15 million, Oszkó said. Lowering the threshold on these properties could allow the property tax rate to be reduced, he added.

Asked about an earlier comment by opposition party Fidesz chairman Viktor Orbán that the limit on Hungary's general government deficit, as a percentage of GDP, should be linked to the EU average, Oszkó said that the country's deficit will be smaller than those of many countries in the region, but Hungary's high level of state debt does not allow for the possibility of a bigger deficit. The IMF showed “no openness” toward the possibility of a bigger deficit at talks, he added.

Oszkó confirmed that the Finance Ministry would stand by its projection for average annual inflation of 4.5%, in spite of higher-than-expected CPI in May. He blamed some of the pick-up in inflation in April and May on exchange rate changes that pushed up import prices, adding that the stabilized forint should allow the ministry's target to be met.

A planned tax on offshore companies is expected to generate a strong inflow of capital back to Hungary, Oszkó said. (MTI – Econews)