Economy
Hungary mulls special levy on energy, telecom sectors - paper
The IMF had reservations not about the bank tax as a whole rather its size. The government hopes to raise HUF 200 billion from it this year and in 2011 (there are debates whether it should/would be phased out in 2012 or not), while the IMF suggested halving that aim, an unnamed source who participated at the talks told the paper.
One of the main reasons the IMF mission left was that the government was not willing to pledge to any other goal but the deficit target for 2010 (3.8% of GDP). The source added that there was no request from the IMF’s part at previous unofficial discussions with Fidesz to carve the 2.8% of GDP deficit target in stone for 2011.
The IMF’s Resident Representative in Budapest told the paper that a special levy on the energy and telecom sectors is not a good long-term solution, because it would make the tax system obscure and would not help foster growth. During the talks that ended on Saturday the IMF mission was not informed about any such plan, she added.Parliament holds its final vote on a 29-point economic action plan, a package of tax measures, presented by PM Viktor Orbán in early June. The focus is on the bank tax and a HUF 2 m cap on monthly income in the public sector that had been put into the spotlight as the cabinet would apply this on the central bank as well, while the ECB (and others too) consider this as a move against the NBH’s independence.Lex Járai remains
An amendment proposal aimed to grant insurers chartered after 1 July 2007 exemption from the new bank tax will eventually remain in the tax package, Péter Szijjártó, spokesman for the PM, told Népszabadság on Thursday. Local business daily Napi Gazdaság said yesterday that this particular proposal will be dropped.The European Commission said on Saturday that it considers several draft laws proposed by the government to be "distortive and potentially not in compliance with EU law," presumably referring to this very law amendment proposal that had been submitted by Fidesz MP Antal Rogán (mayor of the 5th district in Budapest). Although he revoked his proposal, Fidesz got to like it so much that it was resubmitted. Interestingly enough, the break would benefit only a few companies, the most prominent of them being an interest of former and current Fidesz members.
One of the companies in question, life insurer CIG Pannónia Életbiztosító Zrt., is chaired by Zsigmond Járai, who served as Finance Minister - and then Governor of the Hungarian National Bank - under the previous Fidesz government (1998-2002). Among its other founders is current (and former) Foreign Minister János Martonyi. There is also another proposed amendment that may be seen as having been narrowly tailored to suit CIG, namely a cap on the taxes levied on certain insurance products that the company's life insurance arm generates much of its income from. The draft law has already been dubbed "Lex Járai".
Earlier this week, Fidesz faction leader János Lázár told local news portal origo.hu about the proposal: "This is the same as lex MOL. If that law was able to pass in Parliament then similar regulation may be implemented in other cases as well. [...] As far as I’m concerned, three companies would be affected and all of these are Hungarian-owned. I’d emphasise this rather that they are new players." (Lázár got it wrong because the law would apply to more than three companies and not all of them are owned by Hungarians. The other insurers that would be exempt from the tax include that of Erste, MKB Biztosító and Genertel, as well.)
One of the main reasons the IMF mission left was that the government was not willing to pledge to any other goal but the deficit target for 2010 (3.8% of GDP). The source added that there was no request from the IMF’s part at previous unofficial discussions with Fidesz to carve the 2.8% of GDP deficit target in stone for 2011.
The IMF’s Resident Representative in Budapest told the paper that a special levy on the energy and telecom sectors is not a good long-term solution, because it would make the tax system obscure and would not help foster growth. During the talks that ended on Saturday the IMF mission was not informed about any such plan, she added.Parliament holds its final vote on a 29-point economic action plan, a package of tax measures, presented by PM Viktor Orbán in early June. The focus is on the bank tax and a HUF 2 m cap on monthly income in the public sector that had been put into the spotlight as the cabinet would apply this on the central bank as well, while the ECB (and others too) consider this as a move against the NBH’s independence.Lex Járai remains
An amendment proposal aimed to grant insurers chartered after 1 July 2007 exemption from the new bank tax will eventually remain in the tax package, Péter Szijjártó, spokesman for the PM, told Népszabadság on Thursday. Local business daily Napi Gazdaság said yesterday that this particular proposal will be dropped.The European Commission said on Saturday that it considers several draft laws proposed by the government to be "distortive and potentially not in compliance with EU law," presumably referring to this very law amendment proposal that had been submitted by Fidesz MP Antal Rogán (mayor of the 5th district in Budapest). Although he revoked his proposal, Fidesz got to like it so much that it was resubmitted. Interestingly enough, the break would benefit only a few companies, the most prominent of them being an interest of former and current Fidesz members.
One of the companies in question, life insurer CIG Pannónia Életbiztosító Zrt., is chaired by Zsigmond Járai, who served as Finance Minister - and then Governor of the Hungarian National Bank - under the previous Fidesz government (1998-2002). Among its other founders is current (and former) Foreign Minister János Martonyi. There is also another proposed amendment that may be seen as having been narrowly tailored to suit CIG, namely a cap on the taxes levied on certain insurance products that the company's life insurance arm generates much of its income from. The draft law has already been dubbed "Lex Járai".
Earlier this week, Fidesz faction leader János Lázár told local news portal origo.hu about the proposal: "This is the same as lex MOL. If that law was able to pass in Parliament then similar regulation may be implemented in other cases as well. [...] As far as I’m concerned, three companies would be affected and all of these are Hungarian-owned. I’d emphasise this rather that they are new players." (Lázár got it wrong because the law would apply to more than three companies and not all of them are owned by Hungarians. The other insurers that would be exempt from the tax include that of Erste, MKB Biztosító and Genertel, as well.)
