Hungarian Audit Office sees room for gradual personal income tax rate cut

The head of Hungary’s State Audit Office (ÁSZ) sees room for a gradual reduction in the 15 percent personal income tax (PIT) rate.

“In my opinion, the current economic conditions allow for a further reduction of the personal income tax in two or three steps,”

László Domokos said in an interview published in Thursday’s issue of daily Magyar Hírlap.

He said the 1.5 percent vocational training contribution paid by employers could also be cut to 0.75 to 1.0 percent in light of the lower number of job-seekers, and he made a case for eliminating the 15 percent tax on interest.

“It isn’t normal that we tax savings, but not high-interest, high-risk personal loans. There should be incentives for savings that mature in six months or less, too,” Domokos said.

He said cutting the 27 percent VAT rate “wouldn’t be worth it” as consumers would benefit not at all or only temporarily from such a measure. He added that VAT is the “most equitable” tax form as wealthier households which consume more also pay more VAT.

As we wrote before, based on the latest calculations of Hungary’s EU Convergence Programme, households are hiding about 20% of their wealth. People in the highest and lowest income brackets are the most likely to underreport their wealth, read more details HERE.

How much is the salary of PM Orbán and Hungarian politicians?

Source: MTI/Magyar Hírlap