Economy
Hungarian lawmakers to soften "chips tax" rules, seek later imposition date
More time to gear up for the tax
Three of the amendment proposals submitted were authored by MPs of the governing party. Under one of these the law on the “chips tax" would become effective only on 1 January 2012 instead of 1 September this year as originally intended.
The mistake of the original bill was acknowledged in today’s amendment proposal. This points out that suppliers in Hungary sign annual contracts with retailers and these agreements may be modified in a limited number of cases during the year. The same goes for price increase.
As the producers cannot pay the public health product free from their own resources, they would need to incorporate a part of it in their prices. And if this cannot be made via amending their existing contracts they will need to find out sources that may lead to layoffs, the amendment proposal submitted by Zoltán Nógrádi and László Vécsey says.Softening ideas
Another proposal by Nógrádi and Vécsey would make food flavourings exempt from the new levy. The key condition to that would be that the product in question cannot be consumed in itself, i.e. it must be a flavour enhancing stuff. These products include salt, died and chopped vegetables and spices. While neither salt nor spices are subject to the tax in themselves, their combination is. Taxing such food flavourings would equal taxing the salt within these and that would go against the very purpose of the measure and would infringe competition rules, they said.
Under their third proposal the tax on flavourings - if their previous notion is rejected - should be HUF 125 / kilogram instead of HUF 500 / kg as proposed originally.
Ferenc Koncz, also of the governing party, wants to take out powdered cocoa to be exempt from the tax, reasoning that 95% of Hungarian children consume it with milk. As the product is generally used only when mixed with something else, it should not fall in the same category as chocolate and other sweets, he explained. The MP also said hundreds of jobs were created over the past decades in the cocoa powder making business and these would be put at risk if the tax was applied on this product too.
Three of the amendment proposals submitted were authored by MPs of the governing party. Under one of these the law on the “chips tax" would become effective only on 1 January 2012 instead of 1 September this year as originally intended.
The mistake of the original bill was acknowledged in today’s amendment proposal. This points out that suppliers in Hungary sign annual contracts with retailers and these agreements may be modified in a limited number of cases during the year. The same goes for price increase.
As the producers cannot pay the public health product free from their own resources, they would need to incorporate a part of it in their prices. And if this cannot be made via amending their existing contracts they will need to find out sources that may lead to layoffs, the amendment proposal submitted by Zoltán Nógrádi and László Vécsey says.Softening ideas
Another proposal by Nógrádi and Vécsey would make food flavourings exempt from the new levy. The key condition to that would be that the product in question cannot be consumed in itself, i.e. it must be a flavour enhancing stuff. These products include salt, died and chopped vegetables and spices. While neither salt nor spices are subject to the tax in themselves, their combination is. Taxing such food flavourings would equal taxing the salt within these and that would go against the very purpose of the measure and would infringe competition rules, they said.
Under their third proposal the tax on flavourings - if their previous notion is rejected - should be HUF 125 / kilogram instead of HUF 500 / kg as proposed originally.
Ferenc Koncz, also of the governing party, wants to take out powdered cocoa to be exempt from the tax, reasoning that 95% of Hungarian children consume it with milk. As the product is generally used only when mixed with something else, it should not fall in the same category as chocolate and other sweets, he explained. The MP also said hundreds of jobs were created over the past decades in the cocoa powder making business and these would be put at risk if the tax was applied on this product too.
