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Halving employer contributions in tax base would raise net income by 3%

Halving the employer contributions in the personal income tax base would raise most Hungarians' net pay by about 3%, economic research company GKI said on Thursday.

At present, the personal income tax base includes 100% of employer contributions, as well as gross income, but the law will halve the amount of employer contributions in the tax base in 2012 and reduce it to 0% in 2013.

On Thursday, Origo.hu said the National Economy Ministry is considering keeping the full amount of employer contributions in the tax base in 2012.

If the amount of employer contributions is halved, net income of Hungarians earning gross HUF 100,000 a month will rise 2.9%, while net income of those earning gross HUF 200,000 will increase 3.2% and net income of those earning HUF 300,000 will climb 3.5%, GKI calculated.

The calculations assume unchanged gross wages, tax write-offs and minimum wage.