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Working Hungarians to take more home under gov't tax changes

The government's restructuring of the tax system aims to cut payroll costs and see that Hungarians keep more of their wages, but the room for maneuver is limited as the recession will cause tax revenue to fall, Finance Minister Peter Oszkó said on Thursday.

The monthly net income of a worker earning gross HUF 240,000 (€835) could rise by HUF 20,000 next year because of the government's tax changes in 2010, Oszkó said. Only the highest earners will be affected negatively by changes to the personal income tax, he added.

Tax centralization will fall under 40%.

The government's decision to tax extra-wage compensation, such as meal and vacation vouchers, is expected to generate additional tax revenue of HUF 50-60 billion, while changes to the personal income tax system will result in a HUF 250-260 billion decline in budget revenue, Oszkó said.

Oszkó gave a positive assessment of government measures to preserve workplaces, citing the slower fall in workplace numbers in the country compared to other countries in the region.

Asked about the government's planned 30% tax on offshore companies, Oszkó said he did not expect the tax itself to generate revenue, but it would broaden the tax base as companies opt to pay the 19% corporate tax rate instead of the 30% one.

The higher corporate tax rate will cover just 70-80% of the fall in revenue due to the elimination of the solidarity tax, Oszkó said.

The government will raise the corporate tax rate from 16% to 19%, but eliminate the 4% solidarity tax from 2010. (MTI-ECONEWS)