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Orbán firmly in favor of scrapping simplified business tax

Prime Minister Viktor Orbán took a decisive and firm stand on eliminating the Simplified Business Tax at a meeting of MPs of governing Fidesz-KDNP on Monday, but the parliamentary group is asking the cabinet to consider the possibility of raising the tax next year and scrapping it only in 2013, Fidesz parliamentary group leader János Lázár said at a press conference on Monday.

The parliamentary group acknowledged the government’s stand on scrapping the tax, Lázár said.

Parliament’s Audit and Budget Committee on Wednesday rejected a proposal by László Koszorús, an MP of governing Fidesz, to eliminate the Simplified Business Tax, also known by its Hungarian acronym "eva".

Fidesz MP József Dancsó argued that eliminating the tax was a step that would affect many businesses. But deputy state secretary for tax affairs at the National Economy Ministry Ádám Balog backed the proposal to scrap the tax.

MPs on the committee backed a proposal to raise the annual revenue cap on companies that can opt to pay eva from HUF 25m to HUF 30m as well as to increase the tax rate from 30pc to 35pc of revenue.

Companies that pay eva may not deduct any costs from their tax base.

The tax generated revenue of HUF 86.5bn in January-September, the latest general government data from the National Economy Ministry show. It is expected to bring in HUF 180.1bn for the full year, according to a downward revised target approved by Parliament, practically level with the HUF 181.9bn eva generated in 2010.

Eva is expected to bring in revenue of HUF 179.1bn in 2012, HUF 187.7bn in 2013, HUF 197.8bn in 2014 and HUF 208.2bn in 2015, according to the 2012 budget bill.