Hungarian Taxpayers To Lose Tax Allowances

by Ulrika Lomas, Tax-News.com, Brussels

02 March 2009

Hungarian Finance Minister Janos Veres has called for tax allowances to be pared back in order to help eliminate Hungary’s budget deficit, which currently stands at HUF210bn (USD884m).

Speaking at a recent conference Veres said that the government has little option but to significantly revise the system of tax allowances, arguing that these currently cost the state HUF215bn (USD907m) annually, a figure he warned is unsustainable.

Veres disclosed that only two allowances would be kept in their current form, firstly one for families with three or more children and secondly one in place to reduce tax on long-term savers. The Finance Minister particularly noted that fringe benefits would see a wide scale revision to restore fairness to the tax system.

Veres stated that the reduction in tax allowances would help reduce Hungary’s budget deficit in line with the Maastricht criterion of 3% of GDP, needed for Euro adoption. Citing recent discussions with the European Union, Veres said that negotiations were underway with the EU over the possibility of gaining a more lenient timescale for Hungary’s Euro adoption.

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