June 5th, 2009

Reports suggest personal tax reform unlikely to benefit most filers

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The government’s planned changes to the personal income tax system will be less favourable to taxpayers than initially suggested, business dailies Napi Gazdasag and Vilaggazdasag said on Friday.

According to the initial announcement, the maximum annual salary affected by the lowest tax bracket will be raised from 1.7 million to 5 million forints from next year. However, it was only added later that the calculation of the annual salary will also change.

A system coined “super gross” will be introduced which means all social/health insurance/medicare fees paid by the employer will have to be added to the gross income when calculating the annual salary. As a result, instead of 5 million forints, the limit will be actually 3.93 million forints, the papers said.

According to Vilaggazdasag calculations, only those taxpayers will be left with slightly more net income whose gross monthly salary is currently around 200,000 forints.

Finance Minister Peter Oszko has said that personal income taxes will drop by an extent unprecedented since 1990.

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Comments [5]
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  1. JD says:
    June 7, 2009 at 12:55 am

    So if we end up hardly better off, it sounds like, if you factor in the “super gross” salary the equivalent rate of total deductions using “super gross” is heading towards 60% or even more.

    Well done Hungary, only this bunch of numb nuts could increase taxation by trying to reduce it.

    This place really is the largest open air lunatic asylum on the planet.

  2. Mencelus says:
    June 8, 2009 at 3:01 pm

    Is this true? How can that be done – the social
    contributions from companies are just that,
    contributions. They are not part of a person’s
    salary, right? But now I’ll be taxed based on
    them? Way to go Hungary! Once again, punishing the
    honest worker who pays their taxes properly. Why
    bother? If you’re honest and do everything right,
    the government just increases your burden.

    I can’t believe I’m going to say this – let Fidesz
    in! Maybe they’ll fuck up, but I can’t imagine
    even they’d pull this one!

  3. ed hardy says:
    June 16, 2009 at 9:00 am

    Great work! I really enjoyed this article! Hope to read more from you soon!
    ed hardy clothing

  4. Rolrox says:
    June 17, 2009 at 8:36 am

    Aside from the additional complexity this poses, this would make HU even less competititive than before when trying to lure FDI.

    Is this an outcome of consultation with industry and panels of experts?

  5. Donizelli says:
    June 17, 2009 at 9:10 pm

    Mencelus, I guess you are right that you are not getting it.

    “Is this true? How can that be done – the social
    contributions from companies are just that,
    contributions. They are not part of a person’s
    salary, right? But now I’ll be taxed based on
    them?”

    SHORT ANSWER: Yes. Meanwhile, over the pond in the United States of America (whatever is still left of it, anyhow), US President Hussein Obama is going to be TAXING THE HEALTH INSURANCE BENEFITS OF ALL WORKING AMERICANS. Well, maybe not his owwn and those of members of the US Congress, but everyone else’s.

    So, I assume this taxation of benefits is something perfectly okay to do for America — just not for Hungary, or WTF?