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Hungary: Economist sees little shift in tax burden proposals

Tax changes proposed by the government would do little to change the tax burden for Hungarians, András Vértes, head of economic think tank GKI, told MTI.

The proposals were published on the website of the Finance Ministry after leaked details were published in the morning by several dailies on Friday. “The proposals do not increase or decrease the tax burdens of no one specific group very much,” Vértes said. “They are just a little better or a little worse for people.” Middle-income earners will be slightly better off under the government tax program, and a drop in payroll tax will improve the situation somewhat for SMEs.

But, for big companies, the benefit of scrapping the 4% solidarity tax is offset by the proposal to raise the corporate tax from 16% to 18%. The proposals would end many ways companies can reduce their tax base and it eliminates some tax preferences. The tax package, which is expected to save taxpayers about Ft 300 billion in the first year, is likely to be credible and acceptable to foreign investors, Vértes said.

It does not move the tax burden from one social group to the other, even in changes to the tax brackets. Among the points of the program Vértes welcomed was a proposal to introduce a tax on company cars as well as on non-wage compensation. He added that any steps to crack down on the shadow economy would be welcome. (MTI–Econews)