May 10th, 2012

Opposition attacks gov’t over new taxes

Hungary’s opposition parties attacked the government’s new tax policies announced on Wednesday. The main opposition Socialists said the government was making poor people pay for the failure of its economic policies.

Istvan Jozsa, deputy head of the party’s parliamentary group, told a press conference that the new insurance, telephone and transaction taxes meant a new austerity, an unfair tax hike. He said the government was lying when it promised its economic policy would lead to growth, and that it had not met a single goal over its two years in office.

He said it was obvious that companies would transfer costs of the new taxes onto customers and insisted that the new taxes raised burdens for poor people primarily.

The small opposition LMP criticised the government for making no major changes to the tax system. Gabor Vago, the party’s lawmaker, said the flat tax should be eliminated and taxes on labour cut. Vago said economy minister Gyorgy Matolcsy’s economic policies were unpredictable and the government was simply renaming taxes which were to hit the same sectors and passed on to be paid by “the common folk” and no steps towards inducing growth or creating jobs were taken.

The radical nationalist Jobbik party said the government had “put new breaks on the economy and put new burdens on the Hungarian people”. Janos Volner, the party’s deputy parliamentary group leader, said the government had no ideas for boosting industry, farming or tourism, whereas these were the sector, according to Jobbik, which could channel external revenue into the Hungarian economy.

Volner cited a fresh data from the OECD which shows that Hungary tops the list of countries with the highest tax on products and services and ranks third in terms of levying the highest taxes on the average earner. He said the government’s latest measures would cement Hungary’s economic backwardness and low growth potential.

Gyorgy Matolcsy, the economy minister, announced on Wednesday that the government would eliminate the banking tax and other sectoral “crisis” taxes in 2014 and introduce three new taxes. From 2013, the tax for banks will be halved and from 2014 it will be completely eliminated, he said. At the same time, under its economic Szell Kalman Plan 2.0, the government would introduce a tax on telephone charges, financial transactions and certain types of insurance. Matolcsy said companies would be discouraged by fierce competition from transferring the burden of the new taxes onto customers.

He said the new measures would bring the budget deficit to below 3 percent of gross domestic product (GDP) in upcoming years, and create extra tax revenue of 500-600 billion forints (EUR 1.7-2.1bn) which could be turned towards reducing income tax later on.

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  • Feher Gyorgy

    Matolcsy is a true genius; often misunderstood but always bright to the right.
    Without him, Hungary would need a lot of austerity measures that would affect the people. With the current plans, people will feel ada, zip, nothing.
    And if Matolcsy’s plan works out, we will not even need the IMF or EU any longer. Isn’t life beautiful on a sunny day like today?

    • Cogito

      Thus spoke the idiot.

    • Vidra

      Of course he could put in place a progressive income tax policy and/or a real property tax, but they are against the Cardinal Law. Besides, the only new jobs they would create would be for accountants (to help cheat them) and tax inspectors (to help catch them) and the O**g**chs would have less money to donate to their preferred political party.

  • én

    Hungary not needing IMF or the EU?! Indeed…”It is often better to keep one’s mouth shut and appear stupid than to open it and remove all doubt”.
    And that goes for writing as well…

  • Viking

    under its economic Szell Kalman Plan 2.0, the government would introduce a tax on telephone charges, financial transactions and certain types of insurance. Matolcsy said companies would be discouraged by fierce competition from transferring the burden of the new taxes onto customers

    If that “fierce competition” works well, maybe Fidesz can tax that also?

    Fidesz – Never disregard an opportunity to introduce a new tax!

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