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Hungarian tax cuts hinge on broader revenue base

Hungary’s government may be able to cut some taxes and eliminate others if it succeeds in boosting the number of people and companies contributing to budget revenue, Deputy Finance Minister Miklós Tátrai said.

Prime Minister Ferenc Gyurcsány’s government raised taxes last year and is cutting subsidies to trim the budget deficit after running up the European Union’s widest shortfall. Higher revenue has contributed to the budget gap being less than forecast both in January and February.

Gyurcsány has pledged to shift taxes to spur more competitiveness as economic growth slumps to the slowest in a decade. While expert-level discussions have started, a complete overhaul of the tax system isn’t possible until at least 2012, Tátrai said today.

„A big basic, fundamental change in the present tax system is not imaginable,” Tátrai told a meeting of US business leaders today in Budapest. „Reducing some taxes or canceling some smaller taxes is possible. The government’s will is to widen the tax base. If we can do that, we will cut or cancel some taxes.” (Bloomberg)