July 13th, 2012

Gov’t will stand ground on property tax, wealth tax in IMF talks, says Varga

The property tax and the wealth tax could be put on the table at talks with the International Monetary Fund but Hungary will not yield ground in these, Hungary’s chief negotiator for the IMF/EU talks said on Friday.

Speaking to commercial television channel TV2, Mihaly Varga said that they will call the IMF’s attention to earlier rulings of the constitutional court. “A levy like a property tax in Hungary can not be introduced currently because the preconditions for it are not there”. He added that the constitutional court had earlier ruled in the matter.

Concerning the 16 percent flat-rate tax, Varga said that it would be in place in a “pure form” for the first time from 2013. He added that the government would ask the IMF to wait and see what this system could achieve.

He said that the economic crisis would not last forever and [after that] the Hungarian tax system will be able to accelerate economic growth and create more jobs.

He reiterated that Hungary would ask for a precautionary loan. Hungary can finance itself and does not need external financing but given the European economy’s current situation, it cannot be foreseen whether this will change or not, he said. Varga added that the deal could be sealed in the autumn.

A property tax would not serve Hungary’s interest or contribute towards making full use of the country’s potential, Prime Minister Viktor Orban said earlier in the week.

The IMF will start talks with Hungary on Tuesday next week on a stand-by agreement (SBA), the fund’s director of external relations, Gerry Rice said on Thursday.

  • IMF

    “preconditions for it are not there” Damn it, Viktor, you have a two thirds majority. Simply put the “preconditions in place”

    “wait and see what this system could achieve” Don’t screw with us, Viktor. We have seen what it did…give away HUF600bn/year which you could not afford. The only new aspect is a further give away.

    “could be sealed in the autumn” It could have been sealed in the Spring. Don’t you just love this “could” word?

    “A property tax would not serve Hungary’s interest or contribute towards making full use of the country’s potential” Enough BS Mr Orban, please remember that you are talking to us and not to the electorate. Facts and numbers please.

  • wolfi

    WTF is this “wealth tax” ?

    If it means the income tax then it should be called the “Poor peoples’s tax” because the flat tax hurts poor people much more than those rich bastards aka Fidesz Oligarchs!

  • American in Budapest


    The tax rate here in Hungary is one of the highest in Europe and clearly depresses economic growth.

    Social contributions are still taxes.

    I pay myself a small salary of 200.000 Forints. Employer and employee taxes and social contributions total 120,000.

    Such a system has no future. It encourages an exodus of young Hungarians to other countries, leads to tax evasion, and limits the amount of savings available for investment.

    All taxes and social contributions should be capped at 40%. A 40% flat tax, including social contributions, is high enough.

    This European debt crisis is fundamentally due to social democracies living beyond their means by financing excessive consumption for their citizen by issuing debt.

    And by the way, we should encourage to become rich instead of trying demonize them. I don’t think the middle or the lumpen proletariat has any moral advantage.

  • Vidra

    When you have a government that’s so eager to pass retroactive legislation in many areas, what is their ideological problem with taxing people on assets they bought on illegally untaxed or “black” income?

    All it would take would be a change in the law to qualify such transactions as money laundering and a joint operation by the banks and the tax authorities to find and hit the guilty parties.

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