It was the introduction of the flat personal income tax by the current government which has led to the strict austerity measures Hungary is now facing, former Finance Minister Péter Oszkó said last week.
Oszkó told Világgazdaság that tere was a big difference between the tax reforms proposed by the former Bajnai government and the version carried out by the current government.
The previous government would have raised the threshold for the lower tax rate to Ft 15 million (€56,000) by 2011, because it was certain that would have been the last reasonable step towards a flat rate income tax. Oszkó said the same proposal had been made by the economic experts’ forum Reform Alliance (Reformszövetség) earlier. This would have resulted in a Ft 150 billion decrease in income tax revenues.
The current government’s tax reforms resulted in an additional Ft 350 billion decrease in revenues, and for this reason, strangling austerity measures became necessary.