In its analysis entitled „Reforms for Stability and Sustainable Growth,” OECD suggests that tax reforms should focus on reducing the tax wedge on labor, particularly via lowering employers’ social security contributions.
However, any plans to cut the tax burden should not be implemented before a sustainable spending consolidation is on track. The Organization for Economic Co-operation and Development report maintains that Hungary’s budget deficit must be pushed below 3% of GDP and that economic reforms must continue, said Aart de Geus, Deputy Secretary-General of OECD in Budapest. Geus also said that Hungary needs to further decrease the size of the country’s public sector. The most important message in the OECD’s report is that Hungary should continue to implement its program of fiscal consolidation, said Finance Minister János Veres, adding that the survey also shows that continuing economic reforms will increase investors’ confidence. OECD officials said that the organization is expecting Hungary to achieve economic growth of 1.5% to 2 % this year and 3% to 3.5% next year. If Hungary goes on with the current reform program and manages to further decrease the budget deficit, the country stands a good chance of becoming part of the EU’s developed region, said Geus. (Gazdasági Rádió)