Hungarians still pay too much taxes

According to mno.hu, the opposition strongly disputes the usefulness of the one-percent reduction of personal income tax. The experts told Magyar Nemzet the reduction, which is planned for next year,  doesn’t really have a big importance, since still the Hungarian salaries almost have the most burden in Europe.

According to Mihaly Varga, Minister of National Economy, due to the tax laws approved on Tuesday, HUF 230 billion will remain in the economy next year. One of the most important, and the most controversial element is the reduction of the PIT from 16% to 15%. According to the parties, this favors the rich and let the poor down.

“It’s true that those with higher income are the initiated, but the people with lower income will also benefit. If not with so much, but they will also earn more” – Head of Tax Department of RSM DTM consulting firm said.

Sandor Hegedus added, regardless of all of those, the Hungarian salaries suffer from the most burdens in Europe. Besides the PIT, you have to pay the 18.5% contribution, which affects the gross income or the 27% social contribution. The expert says 100 Ft net wage costs 196 Ft for an employer. On the family benefit, he said the families with 3 or more children need even bigger salaries to take every opportunity, even if the introduction of the reduced contribution helped the lower-income big families as well.

“However, we see the positive effects of the flat-rate PIT too. Before its introduction, those with very high incomes could evade taxation in several ways. By now, you have to pay 16% and 15% PIT from next year, the economy became whiter during several years – Sandor Hegedus highlighted.

“However, the PIT reduction has no too great importance, actually, despite the fact that the amount is quite significant, HUF 120 billion will miss. Of course, every taxpayer wins, but those who earn just a minimal wage, they will have only with HUF 1000 more – Szabolcs Vamosi-Nagy, former deputy chairman of the tax authorities said.

According to him, the reduction is rather a gesture: it refers to that the government wants to keep its promise that PIT would decrease to a single-digit within a few years. The expert stated the Hungarians would really benefit from the reduction of social contributions in order to increase the salaries. He said we are record holders in terms of the 27% VAT. He calculated if it would have been reduced by 1%, that would cause a HUF 110-120 billion budget revenue shortfall. If the PIT was 9%, single-digit, that would cause a loss of HUF 700 billion.

based on the article of mno.hu
translated by BA

Source: http://mno.hu