The Hungarian opposition party the Free Democrats have been successful in their attempt to include inheritance tax cuts in budget legislation approved last week, but their proposal to increase the value-added tax rate was rejected.
Included in the proposals are changes to inheritance tax that will abolish the levy for all legacies received from direct relations valued at HUF20m (EUR76,540) or less. The draft budget also includes measures to simplify the tax system and reduce the size of the 'black' economy.
It is likely that the opposition party will also support Gyurcsany’s budget proposals when participating in the final vote in mid-December. Voting against the proposals may be counterproductive for the Free Democrats as it may lead to the unstable coalition government dissolving. While a minor party in Hungarian politics, the Free Democrats still hold some sway, and for the minority Socialist government, every parliamentary vote is vital. Should the government fail to force through the 'austerity' budget, the coalition could collapse, leading to fresh elections.
Alongside the inheritance tax measure was a proposal to increase the VAT rate by 2% to 22%. However this amendment was blown out of the water when 364 MPs voted against the proposal, with just six members of parliament supporting it.
Parliament also voted in support of Gyurcsany’s proposals to cap the 'thirteenth month' pension payment at HUF80,000 (EUR300).
The Hungarian parliament also unanimously passed a decision to enforce a tax of 15% on the expense allowances of people in political positions such as MPs, mayors and local government representatives, from February of next year.
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