The government is making preparations for the most comprehensive tax reform of the past 20 years, Prime Minister Ferenc Gyurcsany told reporters on Monday.
“It will not be just one or two percent modifications, but a comprehensive effort leaving hardly any component of the current system unchanged. Different structure, proportions and philosophy,” Gyurcsany said.
Referring to a tax package published by the internet portal index.hu, Gyurcsany said that it was but a working paper, adding that relevant decisions were expected to be made at a government session on Sunday.
Gyurcsany wants to look busy, he doesn’t have a clue what to do, as always.
Not long ago he announced that Hungary will be the first in Europe with a comprehensive crisis handling plan. He likes to talk and make all kinds of silly announcements, that’s all.
Good luck trying to squeeze even more money out of taxpayers to “achieve our budget deficit goal”.
I’m trying to get my head around the benefits of the tax law changes. Unless the tax changes truly reduce the cost to employ to a reasonable level, companies will continue to have to “get creative” (if they don’t have to appear squeaky clean to their internal auditors).
Having modelled the changes re payroll taxes, there is about a 4% reduction on an employee’s take home if the option of 19%/38% (and no more 4% solidarity) is applied. While for the retention of 18%/36% and 4% solidarity the differences is less pronounced tending towards a 1-2% difference.
If looking at the cost to employ somebody, with all the various items added in (including the 2% turnover tax, etc.), for an average wage of say 400K the marginal tax goes from 63.9% to either 59.2% or 61%…
With such a minor change, will this budget further encourage “whitening”? If people still cost 2x what they take home, will companies that are struggling find it easier to survive?
erratum. I should have said that there’s a 4% improvement at best, and 1-2% at worst.