Further tax cuts hinge on growth, says Hungary’s economy minister
Budapest, December 23 (MTI) – Hungary’s government could weigh further tax reductions if the country’s economy grows at a steady rate of over 3 percent, Economy Minister Mihály Varga said in an interview published in Friday’s issue of business daily Világgazdaság.
“We’ve taken things as far as they can go, just as the prime minister requested,” Varga said when asked if the government planned further tax cuts on top of recently-announced reductions to the corporate tax and payroll tax.
“I think everybody has reached the limit of their possibilities, both employers and employees. Now we should wait and see the impact on the economy. That’s why I think it’s too early to revisit the budget. We have to see how the first three months turn out. Only afterwards will it make sense to deal with the question of amending the budget. If our expectations are validated and the economy can grow at a steady rate of over 3 percent, then we’ll have the resources for further measures,” he said.
Asked what taxes should be cut if there is fiscal room for manoeuvre, Varga said he was “certain” that taxes on labour should be reduced, but added that it was also a question of whether or not to lower the personal income tax rate.
“In my opinion, as we’ve reduced the corporate tax to 9 percent and brought the payroll tax down to the central European average, it would make sense to cut the personal income tax. I really hope that this question will be on the agenda in 2018,” he said.
“A single-digit, flat-rate system is the goal,” he added.
Varga said the new payroll tax cuts aim to improve competitiveness and must be coupled with a reduction in bureaucracy as well as improvements to the education system.
“We’re working on this and want to establish a Competitiveness Council with the involvement of economic players, research institutes and experts that can make recommendations. I hope there will be concrete initiatives that the government can weigh by next year already,” he added.
Varga also said he hoped the National Tax and Customs Office (NAV) would be able to prepare companies’ tax returns based on information they provide in future, just as the office prepares personal income tax returns.