The provision contained in the government’s recently adopted tax package stipulating that personal income tax be calculated on gross wages plus employers’ payroll taxes, whose annulment Parliamentary Commissioner for Civil Rights Mate Szabo initiated on Monday, is constitutional, the Finance Ministry said on Monday.
Mr Szabo requested that Hungary’s Constitutional Court repeal the measure, which parliament adopted on June 29 as part of the Bajnai government’s 2010 tax package, because it includes items in the tax base that cannot be regarded as earned income.
The ministry said that the stipulation does not raise the tax burden, noting that the 2010 tax package also lowers personal income-tax brackets, but makes the cost of employment more transparent.
The constitutional court in the Czech Republic found a similar tax measure to be constitutional. Hungary’s Constitutional Court has also determined that the changes reducing or increasing the tax base may conform to fundamental law.
The Constitutional Court asserted that it was the responsibility of the court not to specify which types of income and property can be subjected to taxation, but that taxation is proportional to income and wealth.