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Hungary: PM outlines objectives of proposed tax-cut package

Prime Minister Ferenc Gyurcsány said during the founding session of the Economic Coordination Forum in Budapest on Thursday that the objective of the government’s tax-reduction package announced on Wednesday is to establish a new mentality that will serve to transform Hungary into a western-style country in which citizens abide by established norms.

Gyurcsány said that the government’s Ft 1,000-1,200 billion tax-cut package is based on three basic concepts--that it cannot disrupt the balance of the government budget or interfere with the convergence program, that it cannot encroach upon the established level of social security and that it will serve to broaden the tax base and curb the black and gray economy. The prime minister added that implementation of the government package proposed on Wednesday will take several years, thus the first Ft 300 billion step in the program will take place in 2009.


According the PM Ferenc Gyurcsány, the government’s tax cut program relies on three pillars: keeping social security and the balance of state finance while targeting a wider tax base and whitening the economy. The government wishes to generate a new approach, a western, civil Hungary, the Prime Minister said at the founding meeting of the economic forum GEF. The conditions of work and investment must be improved in Hungary thus reforms are needed in education and training just as in competitiveness and business climate, Ferenc Gyurcsány said. The tax package must harm neither the state finance balance nor the established level of social security, the Prime Minster added. The government intends to launch a national employment program providing work for 50,000 people to compensate for the layoffs in the public sector.


The government will be able to cover the tax cuts amounting to about Ft 1,000 billion during the coming 3 years from the revenues alone that will come from „bleaching” economy, said Finance Minister János Veres at the opening of the exhibition on the history of Hungarian tax-payment.

An increased scrutiny by the tax authority APEH and a simpler and transparent tax payment will serve as incentives, he added. However, the government needs at least 5 or 6 additional devices to further increase the number of jobs and taxpayers.

Veres had made a 30-item proposal on simplifying taxes/tax payment, but this package will be posted if the government has accepted it. The Finance Ministry projects a 3.2% budget deficit for 2009 and expects Hungary to meet the Maastricht criteria in 2010, said Veres.

APEH will launch a free service of personal tax diary on September 1, which will, primarily, serve to warn clients on the tax deadlines, said APEH chairman János Szikora. The exhibition was opened by Veres and Szikora. (MTI-Econews, Gazdasági Rádió)