Shocking statistics on tax evasion in Hungary

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, as reported by portfolio.hu.

In a move to evade taxes, employees try to conceal a significant fraction of their income. The extent to which people are likely to do this is highly dependent on which social group they belong to. The Ministry of Finance estimates that households that only partly declare their income are hiding on average 20.3% of their earnings.

However, the amount hidden very much depends on which income bracket people fall into. Indeed, the lowest and highest 10% income brackets conceal the highest proportion of their earnings.

Another important factor that comes into play is where a particular individual lives; on average, Budapest residents are less likely to underreport their income than people living outside the capital. In Budapest, 10% of income is concealed on average, while in rural areas, this figure rises close to 25%.

Earning concealment is highest in the region of Nyugat-Dunántúl and in the county of Hajdú-Bihar. These can be explained by people commuting to Austria and Romania respectively.

Based on occupation, people in managerial roles are most likely to hide their income. Demographically, older individuals have a lower tendency to underreport their earnings. This may be attributed to people wanting to contribute to their pensions as they approach retirement.

We recently reported how much money tourists spend in Hungary. Orbán also stated that income inequality is down in the country.

Source: portfolio.hu, ec.europa.eu