Junior opposition party Hungarian Democratic Forum (MDF) Monday laid out in Parliament a series of tax proposals designed to roll back Hungary’s widespread tax evasion and streamline the country’s bloated tax system.
As a starting point, MDF would declare a comprehensive tax amnesty, allowing individuals and businesses alike to make good their debts by paying 10% of their unpaid taxes in a lump sum between October and February next year.
The party would also introduce a flat personal income tax of 18%, while stepping up tax and wealth inspections.
The third element would be a three-tiered VAT regime with rates of 5%, 12% and 25% from January next year. Tax on basic food products would be lowered to 12% from the current 20%.
MDF is also proposing to cut employer’s health care contributions by 7 percentage points (this makes little sense as the current rate is 5%), and to scrap eho, a monthly health care fee of Ft 1,950 levied on employers.
Finally, MDF revived its old hobby horse by suggesting the elimination of the “death tax” on inheritance.
The plans were immediately rubbished by observers including a scathing piece in business portal Portfolio.hu (in Hungarian), as half-baked, unworkable and potentially hugely damaging to tax revenues.
This sadly is too little too late. The companies and individuals that have bolted aren’t going to return after paying the cost of relocation, setting up anew, etc.; especially from places like Slovakia – when the % tax is the SAME.