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Govt plans no ‘drastic’ tax changes this year, says official

Hungary’s government plans no drastic tax changes this year, and consultations will precede any small modifications, deputy state secretary for tax affairs Adam Balog said in Tuesday’s issue of business daily Vilaggazdasag.

"We don’t plan any drastic changes, but we will consult with the market on smaller modifications," Mr Balog said.

He said there were no plans at present to raise taxes to compensate for the phasing out of the bank levy and sectoral crisis taxes. He added that the simplification of taxation of SMEs could take a new direction, but few changes would be made this year.

Mr Balog would not exclude the possibility of taxes being brought up at talks with the International Monetary Fund, but he said IMF representatives did not see in full Hungary’s flat rate, proportional tax system as it will appear in its finalised form from 2013.

In a report on Article IV consultations with Hungary published a week ago, IMF staff said compensation schemes and a minimum wage hike introduced to ensure nobody is left worse off because of the flat rate tax "considerably increase the administrative burden of fiscal compliance".

"I don’t think a change to the personal income tax system likely, because it is an important element of economic policy," Mr Balog said.