Hungary’s body of experts, the Reform Alliance, has proposed to the government tax and contribution cuts of HUF 1-2 trillion ($4.3-8.6 billion) to be carried out over the next three years, MTI learnt on Wednesday.
The proposals include cutting employers’ taxes on labor by 5 percentage points, raising the income ceiling on the 18% personal income tax from HUF 1.7 million to HUF 5 million, and the scrapping of a 4% tax for the wealthy while eliminating tax breaks from the system.
They also proposed to raise the VAT to 23% from the current 20%, raise excise duty and company tax, and to introduce a 1% property tax based on property value exceeding HUF 30 million. The changes would mean a revenue loss of HUF 342 billion in the 2009 budget, which could be partially offset by significantly reducing the level of state redistribution and by cutting spending.
The VAT rise could bring in HUF 248 billion on the budget’s revenue side, while the property tax could bring gains of HUF 60 billion, according to the proposals. It said cuts in the tax burden could be worth more than HUF 900 billion, to be raised further to HUF 1,900 billion by the withdrawal of the local business tax. (BBJ, MTI)