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New gov't to introduce preferential tax-bracket to curb illegal employment

Hungary's Fidesz-controlled government to be inaugurated on May 28 plans to introduce preferential tax brackets for sectors of the economy such as agriculture, tourism, construction and the hospitality industry in order to curb illegal employment, Economy Minister -designate György Matolcsy told the online business-news portal FigyeloNet.hu in an interview.

Matolcsy said that Hungary can attain GDP growth of 1% this year through a reduction in corruption and bureaucracy, the introduction of the new government's initial “token” tax cuts this summer and an acceleration of access to European Union Funding.

The streamlining of bureaucracy will take place within a four-year program, the minister of economy-designate added, noting that many of Hungary's government institutions can either be eliminated or consolidated.

Matolcsy told FigyeloNet.hu that the time required for assessing EU tender bids can be reduced to two months from the current 18-20 months.

Hungary's new government will launch its tax-cut program this summer, though will implement significant tax reforms only in 2011, Matolcsy remarked.

The economy minister-designate stated on May 7 that the new Fidesz-controlled government will either eliminate or consolidate 12-16 of the current 52 tax categories as part of its three-year tax-reduction program scheduled to begin on July 1.

Matolcsy said that debtors, banks and the government would all play a role in compensating for the difference in original and current forint rates as part of the new government's planned conversion of foreign-currency-denominated loans into forint loans.

The minister-designate noted that the Fidesz government has formulated no forint targets.

Matolcsy told the online business-news portal that as minister of economy he will work with the National Bank of Hungary's Monetary Council, though as a citizen he believes that the council members should not remain in place following the mistakes they have made over recent years.

Hungary's new Fidesz-controlled government cannot promote the quickest possible adoption of the euro, since Hungary has not satisfied the Maastricht criteria for euro convergence, while euro-zone countries have failed to comply with their own macroeconomic criteria. (MTI – Econews)