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President approves tax-hike legislation

President László Sólyom on Monday signed the tax-raising legislation, which represents 60%-65% of the whole "New balance" fiscal program.

The new package, passed last week by parliament, is designed to improve the country's soaring public finance deficit. The package is intended to cut the budget deficit by Ft 350 billion in 2006 and by Ft 1000 billion in both 2007 and 2008 compared to the original deficit path. The measures are needed for Hungary to attain its target of being ready to adopt the Euro by the second half of 2010, that means cutting the budget deficit to below 3% by 2008. Several business lobbies and employee representatives have turned to Sólyom with complaints about the new package and have asked him to withhold his signature, for they believed these hikes to be unconstitutional. Instead, they want him to ask MPs to reconsider parts of the law. Millions of employees and pensioners will be affected by the austerity measures, while Hungary's competitiveness and the real economy will be put at risk, unions and business leaders insist. (MTI,