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Hungary: More citizens should pay tax

Prime Minister Ferenc Gyurcsány has negotiated with experts on the future restructuring and simplification of the domestic tax system.

All tax experts would support the abolishment of the 4% surtax and the reduction of social contributions presently paid by employers. The PM emphasized, that the easing of taxes would enhance competitiveness and would entail a fairer system. More people should take the burden of taxation as currently 60% of tax bearers declare an income below Ft 150,000, only 30% of them claims an earning between Ft 150,000 and Ft 300,000, while only 10% of tax payers declares income over Ft 300,000. These figures do not reflect reality. The increased number of tax bearers would amplify competitiveness, which would entail investments and would create further jobs.

Péter Oszkó, president and CEO of financial consultancy Deloitte Hungary, also insisted that spreading out the number of tax payers would decrease the number of those citizens, who now declare only subsistence wage and taking the risk of not declaring significant amounts, which go untaxed. Szabolcs Vámosi–Nagy, tax expert of advisory firm Ernst and Young argued that social security contributions should cover the expenses of the healthcare sector. Csaba László, tax partner of advisory firm KPMG proposed the introduction of higher value added tax by 2 or 3 percentage points, green tax and value–based property tax, which could all create new sources for compensating the tax reductions.

The government has not yet decided on which tax proposition would take effect in 2009, therefore further recommendations from members of parliament and experts are welcomed, Gyurcsány said. (Gazdasági Rádió)