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Gov’t to introduce third income tax rate, raise VAT

The government plans to raise the middle VAT rate from 15% to 20% and introduce a third personal income tax rate called “solidarity rate”, which would tax income exceeding Ft 6 billion a year 40%, business daily Világgazdaság reported after the coalition parties held a consultation with Prime Minister Ferenc Gyurcsány yesterday.

The simplified social security contribution (ekho) will remain in effect, but will still be considered experimental and the government will review its effects after one year.

The proposals, which form part of a package aimed at boosting budget revenue, will be presented to the National Interest  Coordination Council (OÉT) today before they are submitted to Parliament next week.