Hungary’s tax centralisation must be reduced by ten percentage points from the current 39pc of GDP over the coming four years, former finance minister and central bank governor Zsigmond Jarai said at the Hungarian Business Leaders Forum on Tuesday.
The tax system must be made simpler and more transparent, Mr Jarai said. These tax goals are for the mid-term, because the budget deficit has to be dealt with in the short term, he added.
The 3.8pc-of-GDP accrual-based deficit target for 2010 cannot be met, and if nothing changes, it could reach 7-8pc by year-end, Mr Jarai said.
Mr Jarai said that, in his opinion, the IMF and the European Commission would accept a general government deficit that reached 5.0pc of GDP as long as the long-term consolidation of state companies was carried out at the same time.
Speaking about the adoption of the euro, Mr Jarai reiterated his opinion aired a week earlier at a meeting of industrialists association MGYOSZ. Although it would be advantageous for Hungary to join the eurozone as soon as possible, a weak economy cannot adopt a strong currency, he said.
“First, the economy has to be put in order, and afterward one can dream about introducing the euro,” he said. Mr Jarai was loath to give a target date for adopting the single currency, but still named 2015 or 2016 as possible years.
Mr Jarai said earlier that he would take a position in a Fidesz-led government, if asked.
Fidesz is tipped to win general elections in April.