Government ready to cut business taxes

In an effort to ease the burden on businesses in light of its policy of raising the minimum wage to a monthly 200,000 forints (EUR 555), the government is proposing a 4 percentage point reduction in the social contribution tax, an official of the innovation and technology ministry said after wage talks on Wednesday.

State secretary for employment policy Sándor Bodó told a press conference that the proposed reduction from 15.5 percent to 11.5 percent would leave a total of 500 billion forints with businesses. The Hungarian government is dedicated to its policy of cutting taxes, he added.

Meanwhile, the Socialists on Wednesday called on the government to cut VAT on basic foodstuffs to 5 percent and of other food products to 18 percent, saying ruling “Fidesz has unleashed brutal price hikes in the country”. Socialist lawmaker László Varga told an online press conference that due to nine-year record inflation, the price rises of basic foodstuffs were double the minimum wage hike, while pensioners were hit especially hard.

Varga insisted that

the government had “weakened the forint on purpose”,

yielding hundreds of billions of forints of profits for the central bank, while driving up the price of imports. Meanwhile, Hungary’s 27 percent VAT is the highest in the European Union, he said. Varga called on the government to “stop profiteering” on food prices and scrap the “extra tax”.

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VAT on food products should not be higher than 18 percent, with VAT for basic foodstuffs cut to 5 percent “immediately”, he said. The Socialists expect the winner of the opposition primary election to include the measure in their election manifesto, he said.