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Business tax to go up 10%, health insurance to double

Hungary's simplified business tax will be raised to 25% from 15% from September 1 and national health insurance contributions will double from 4%, business daily Világgazdaság said on Wednesday.

Prime Minister Ferenc Gyurcsány yesterday announced a general outline of the government's new program but it is not until June 10 that he is expected to publish the full details. Világgazdaság, quoting unnamed sources, said the hikes would be the main tools for moderating real wages. Plans call for this year's budget to raise 170 billion forints on the income side through various tax hikes while 200 billion forints will be cut from expenditures.
The paper speculates that among other income generating measures, the middle VAT rate will be raised to 20% from 15% and the gas price compensation system will be changed to gradually eliminate some subsidies. The latter move is expected to be implemented on July 1.
“By the middle of the government cycle, we want to meet the Maastricht budget criteria,” Gyurcsány said in a statement on Tuesday. The European Commission has forecast that the budget deficit will rise to 7% in 2007 if proper adjustments fail to materialize.