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Hungary: Gov’t crackdown on shadow economy generates HUF 30-50 bln in

  A government crackdown on the shadow economy generated HUF 30-50 billion ($130-220 million) in additional budget revenue in 2008, a report by a government commission set up to audit the crackdown shows.

The crackdown generated an additional HUF 200-250 billion in additional budget revenue in 2006-2008, said commission member Csák Ligeti. Though the crackdown reduced the number of illegal laborers, irregularities were still found at 38% of checks, said commission member Péter Pataky.

The proportion of illegal laborers in the building sector fell, but it rose from 9% to 13% for security work, from 5% to 15% in the catering sector, and from 3% to 5% in the trade sector. Still, tax office and National Health Fund data show payroll tax revenue rose even as overall employment fell, he added.

Tax authorities uncovered HUF 468 billion in unpaid taxes in the course of 280,273 audits in 2008, said commission member István Fekete. The unpaid tax was 31% more than in 2007. Fines for the unpaid taxes came to HUF 304 billion in 2008, 43% more than in 2007.

The commission proposed that a public pact be made on the role of the state, public services and what proportion of tax revenue should be generated by taxes on income, assets and consumption.

The commission found that the two main areas of corruption in Hungary are public procurements and party financing, Pataky said, adding that the Public Procurement Act has to be rethought soon.

The report was the commission’s third since it was established a year and a half ago. (MTI-Econews)