The Hungarian political leadership has reached an initial agreement on the financing of personal income tax cuts scheduled for next year, Prime Minister Peter Medgyessey announced last Friday.
The Prime Minister has been in conference with the socialist party leader Laszlo Kovacs and head of the junior coalition party, the Alliance of Free Democrats, Gabor Kuncze since the government decided to postpone the 2004 tax cuts by one year back in July.
In order to fund the tax cuts, estimated at a cost of between HUF140 billion and HUF150 billion, Medgyessey explained that a proposal to cut VAT (Value Added Tax) from 25% to 23% will not go ahead as planned. Also, duties on gambling and the lottery will be increased, whilst the number of firms eligible for the simplified enterprise tax will be enlarged. In addition, government departments will face a funding squeeze of around HUF 40 billion, the Prime Minister revealed.
The finer details of the plan are due to be debated and approved next week, although the leaders of the main political parties appear to be broadly satisfied with the outcome of the negotiations.
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