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Tax on interest earnings enjoys little support

Plans to introduce a tax on interest earnings from 2007 could be scrapped as a result of campaign promises in the run-up to Hungary's general elections in April, business daily Napi Gazdaság reported on Friday.

According to legislation passed last year interest earnings will be taxed 10% from 2007. Of Hungary's four parliamentary parties, only the liberal Alliance of Free Democrats (SZDSZ), the junior partner in the governing coalition, still backs the introduction of the tax, according to Napi Gazdaság.


A spokesman for the Hungarian Socialist Party, the coalition leader, told Napi Gazdaság that the party backs the introduction of a capital gains tax from 2007, but does not deem necessary a tax on interest earnings.

The Hungarian Democratic Forum (MDF), the smaller opposition party, is opposed to both the introduction of the capital gains tax as well as the tax on interest earnings. Fidesz, the bigger opposition party, says the issue is not a  timely one given the low propensity to save, and says it prefers to focus on lowering payroll taxes.