June 7th, 2010
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Economic action plan to be presented to Parliament on Tuesday

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The cabinet will decide on the action plan on Monday and Prime Minister Viktor Orban will present it to parliament on Tuesday, Minister of National Economy Gyorgy Matolcsy said on Monday, confirming that the plan would be aimed at maintaining the current 3.8pc general government deficit target. The other main objective of the plan is to kickstart growth, he said.

Hungary’s new, Fidesz-led government started an extraordinary three-day cabinet meeting on Saturday to formulate a government’s economic action plan aimed at meeting Hungary’s established 2010 deficit target of 3.8pc of GDP, Prime Ministerial State Secretary Mihaly Varga announced on Saturday after presenting an interim report of his fact-finding commission on the state of the budget.

Speaking on a television program on Monday morning Mr Matolcsy stated that there was no need to introduce new austerity measures, adding that the government could meet its fiscal objectives through cutting bureaucracy. They plan to stimulate investment and accelerate Hungary’s call-down of European Union funding, he said.

The minister of national economy said that government is examining the practice of neighbouring countries of flat-rate personal income-taxes of between 15pc and 20pc. He said that the government could introduce such a flat tax in January 2011, and could introduce flat-rate family taxation within two years.

Mr Matolcsy said that they will be able to phase out as much as a fifth of the current 58 taxes and launch a three-year radical tax reduction programme yet this year.

The government is considering the introduction of a flat income-tax of around 16pc, Prime Ministerial Spokesman Peter Szijjarto said on Sunday, in the break of a three-day extraordinary cabinet meeting.

The prime ministerial spokesman added that one of the main direction of the government’s economic policies continue to be tax cuts.

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  • Koermendi

    Nagy Isten! A flat tax, cutting back on bureaucracy and favouring
    entrepreneurial endeavour?

    It’s not Hungarian…

  • Farkas László

    Something like the 16% flat tax needs needs to be tried. Better to have a lower rate, but which is collected, rather than a much higher rate that is spottily collected.

    Slovakia achieved a greater percent GDP growth since it’s EU accession than Hungary, I think largely due to it’s much lower tax rate.

  • Macska

    FL. Indeed you are right again. It is better to set a rate of tax that is recoverable rather than pie-in-the-sky percentages that everyone avoids paying.
    A poster named JD was a positive gem when it came to tax issues. He would set out his ideas every morning on this site. He was eventually forced to abandon all hope during the death throes of the MSZP reign. He might be sleeping with the fishes at the bottom of the Duna for all we know. If not – he should come back!?
    One important thing: I think there is common agreement on a lot of political issues like tax and we should aim to follow up what the government does in these areas over the coming months.
    BTW. Erik&Olga said they were going to follow up the sale of the three buildings in Budapest. Bated breath time?

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