Hungary's Leaders Yet To Reach Decision On Tax Cuts

by Ulrika Lomas, Tax-News.com, Brussels

03 September 2003

Top level talks between the leaders of the three main Hungarian political parties making up the governing coalition have failed to arrive at a consensus on how to finance tax cuts scheduled originally scheduled for next year and then postponed by Prime Minister Peter Medgyssey.

It is anticipated that the Prime Minister and the presidents of the Alliance of Free Democrats (SZDSZ) and the Hungarian Socialist Party (MSZP) will make an announcement of their final decision this week. Gabor Kuncze, chairman of junior coalition party Alliance of Free Democrats confirmed in media reports that "as far as I know, the parties failed to reach a consensus about the ways of financing income tax cuts. The participants in the trilateral professional committee have only agreed on the framework."

The trilateral talks came about as a result of Medgyssey's decision to delay $656 million worth of tax cuts, an action strongly objected to by the junior coalition partners. "The alliance of Free Democrats insists that the government's manifesto and the tax brackets that had been jointly approved by the coalition parties be implemented," said Kuncze at a press conference last month.

Under the proposals, personal income tax rates will be cut from 40% to 38% in the top bracket, from 30% to 26% in the middle tier and from 20% to 18% in the lower band.

Recommended