Parliament could consider 9% personal income-tax rate next autumn

Hungary AM

Hungary’s parliament could consider lowering Hungary’s flat-rate personal income tax to 9% from the current 16% next autumn when considering tax legislation to come into effect in 2015, National Economy Minister Mihály Varga said in an interview with business weekly Figyelő published yesterday.

Reducing the tax could cut budget revenue by about HUF 500 billion, but Hungary’s rising economic growth could offset the shortfall, Varga said. The national economy minister said that the government has not yet decided whether it will spend the excess budget revenue resulting from Hungary’s growing economy on tax cuts, investment or social measures.

Varga noted that public sector employees in Hungary have not received wage increases in six years, adding that lack of wage hikes in this sector lead to deterioration in the quality of services. The growth path is clear until the end of 2014, he said, the question is how it can be continued and whether there will be further economy policy measures boosting investments.

Varga said that the continued objective of the government is to remove forex-based bank loans from Hungary’s credit market.