Economy
Hungary to freeze 5-year tax cut programme, hike some taxes - papers
Hungary has already started the tax cuts in January, reducing the top rate of value-added tax to 20% from 25% and the top rate of personal income tax to 36% from 38%.
The government said last June the entire programme would decrease the tax burden for business and private individuals by HUF 1,000 billion by 2010.
As Hungary needs to trim the public sector deficit to 3% of GDP by 2008 from 6.1% in 2005 to adopt the euro in 2010, the rest of the programme will be delayed, business daily Napi Gazdaság reported, quoting from a government programme to be presented on Tuesday.
Citing reliable sources, business daily Világgazdaság said the government was considering raising the 16% rate of corporate tax to 18%. (Corporate tax is 10% up to HUF 5 million tax base under certain conditions.) The paper calculated that a 1-ppt hike of the tax would put HUF 30 billion extra into state coffers, provided that no company decides to move out of the country or try to hide profits.
The corporate tax rate is 19% in Slovakia and Poland and 24% in the Czech Republic. While rumours about the hike are definitely bad news, it is not the most crucial aspect for foreign investors, who also focus on tax breaks and incentives.
Napi Gazdaság said it was unlikely that the rate of corporate tax could be raised before 2007.
The government might also introduce a temporary "development tax" which could be levied on a wider tax base than the 3% "solidarity tax" floated in the press earlier, which would have affected companies only, the paper added.
According to broadsheet Népszabadság, the government plans to erase natural gas price subsidies worth HUF 100 billion, putting aside HUF 30 billion of the savings to help needy households.
It also plans to cut drug and housing subsidies and will prepare legislation enabling it to cut the number of civil servants and potentially fire about ten thousand state-school teachers, the paper added.
The Socialist Party (MSZP) and the Alliance of Free Democrats (SZDSZ), who won an unprecedented second term in office in April's election, will sign a coalition agreement on Monday and present the full list of ministers on Friday.
The government will carry out fiscal adjustment this year that will reduce the public sector deficit by HUF 350-400 billion, Prime Minister Ferenc Gyurcsány said on Saturday.
Half the adjustment will consist of revenue raising measures and half of spending cuts, he said.
The government said last June the entire programme would decrease the tax burden for business and private individuals by HUF 1,000 billion by 2010.
As Hungary needs to trim the public sector deficit to 3% of GDP by 2008 from 6.1% in 2005 to adopt the euro in 2010, the rest of the programme will be delayed, business daily Napi Gazdaság reported, quoting from a government programme to be presented on Tuesday.
Citing reliable sources, business daily Világgazdaság said the government was considering raising the 16% rate of corporate tax to 18%. (Corporate tax is 10% up to HUF 5 million tax base under certain conditions.) The paper calculated that a 1-ppt hike of the tax would put HUF 30 billion extra into state coffers, provided that no company decides to move out of the country or try to hide profits.
The corporate tax rate is 19% in Slovakia and Poland and 24% in the Czech Republic. While rumours about the hike are definitely bad news, it is not the most crucial aspect for foreign investors, who also focus on tax breaks and incentives.
Napi Gazdaság said it was unlikely that the rate of corporate tax could be raised before 2007.
The government might also introduce a temporary "development tax" which could be levied on a wider tax base than the 3% "solidarity tax" floated in the press earlier, which would have affected companies only, the paper added.
According to broadsheet Népszabadság, the government plans to erase natural gas price subsidies worth HUF 100 billion, putting aside HUF 30 billion of the savings to help needy households.
It also plans to cut drug and housing subsidies and will prepare legislation enabling it to cut the number of civil servants and potentially fire about ten thousand state-school teachers, the paper added.
The Socialist Party (MSZP) and the Alliance of Free Democrats (SZDSZ), who won an unprecedented second term in office in April's election, will sign a coalition agreement on Monday and present the full list of ministers on Friday.
The government will carry out fiscal adjustment this year that will reduce the public sector deficit by HUF 350-400 billion, Prime Minister Ferenc Gyurcsány said on Saturday.
Half the adjustment will consist of revenue raising measures and half of spending cuts, he said.
