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Gov't puts off raising tax rates

The government will raise the threshold between Hungary's two personal income taxes retroactively from January 1, 2009, rather than from July 1, as earlier planned, but it will push back an increase of the tax rates to 2010, MTI learnt.

Under a modified tax package to be discussed at a cabinet meeting on Wednesday, the threshold between the lower and upper tax rates will rise from HUF 1.7 million to HUF 1.9 million from January 1, 2009. The earlier plan would have raised the threshold from HUF 1.7 million to HUF 2.2 million from July 1. At the same time, the government also planned to raise the lower personal income tax rate from 18% to 19% and the upper rate from 36% to 38%. The modified package would introduce the changed rates only from 2010, while at the same time raising the threshold to HUF 3 million.

The modified tax plan would eliminate a “solidarity tax” for wealthier taxpayers only from next year, rather than July 1, 2009.

Pressured by employers, the government changed the plan to make just half, not all, of extra-wage compensation, such as meal and vacation vouchers, liable to tax.

The other elements of the plan, including raising the main VAT rate from 20% to 23%, while reducing payroll tax, are unchanged from earlier, MTI learnt. (MTI – Econews)