MSzP, Fidesz reject flat tax
Wednesday, March 8, 2006, 08:59
Hungary's two main rival parties ruled out the introduction of a flat tax as Socialist finance minister János Veres and opposition Fidesz's top finance policymaker Mihály Varga debated the economy on public television. Both came to a rare point of agreement in the face of a call on the same Tuesday evening program by the small governing liberal party leader, Gábor Kuncze, to introduce a harmonized and broadly lower rate for the various types of tax. Veres argued that a flat tax would be unfair because low and high earners would be contributing the same proportion of their income. Varga said Hungarian society had already come to accept the principle of redistribution. Both thought that such a move would result in lost revenue.
Kuncze argued for the flat tax saying it is simpler and more transparent and would boost the country's competitiveness. Also, it would help to bring the grey economy into the taxed one, he said. Experience in other countries with a flat tax showed that instead of reducing treasury income, it augmented it.