Tax Cuts Top Of The List At Next Hungarian Cabinet Meeting

by Ulrika Lomas, Tax-News.com, Brussels

05 August 2008

Hungary's Finance Minister, János Veres, spoke out this week to announce that tax cuts will be top of the agenda when the government meets for discussions at the next cabinet meeting on the 21st of August.

Mr Veres has suggested that a reduction or elimination of the 4% "solidarity tax" combined with changes to payroll taxes will be the main topics of discussion, adding:

"The figure for next year's tax cuts could be in the hundreds of billions of forints, not in the thousands and not in the tens of billions of forints."

The country's solidarity tax has long been a source for debate by the government, who, in 2006, decided to introduce a tax on companies and individuals earning above average incomes as a means of curbing the budget deficit.

For some, particularly in the business community, the solidarity tax was a tax too far, and foreign investors threatened to pull out of the country unless the government changed its mind.

However, earlier this year, the tax came into question again when the country's Prime Minister, Ferenc Gyurcsany, reportedly told Hungarian business leaders that the government would have room to repeal the unpopular tax, but only if the revenue is offset by increases in taxation elsewhere.

In addition to this, Mr Veres has hinted that rates of VAT might be reduced for some products in the country - provided the financial difference can also be made up for elsewhere in the budget.

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