www.earthtimes.org/articles/show/196508,hungarian-opposition-to-push-for-flat-tax-after-coalition-collapse.htmlHungarian opposition to push for flat tax after coalition collapse
Posted : Thu, 03 Apr 2008 14:21:00 GMT
Author : DPA
Category : Finance (General)
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Budapest - Small Hungarian opposition party the Hungarian Democratic Forum Thursday said it would attempt to force the introduction of a flat tax after a coalition split this week raised the prospect of a minority government. "The withdrawal of the (junior coalition) Alliance of Free Democrats has opened up the possibility of introducing a flat tax from 2009, since this gives the parliamentary majority for the decision," the party said in a statement.
Free Democrat leader Ibolya David called for opposition parties to attend talks on April 15 to work out details of a bill to submit to parliament by May.
The party wants to emulate regional peers such as Slovakia and Romania by introducing a flat 18-per-cent personal income tax to reduce a tax burden it called "unfairly high."
The Free Democrats and main opposition party Fidesz - along with its allies the Christian Democrats - have said in the past that they would favour a flat tax.
While the Free Democrats were in the coalition, however, they backed the senior Hungarian Socialist Party's stance that a flat tax could not be introduced while economic reforms aimed at cutting the budget deficit and adopting the euro were in progress.
The Free Democrats, however, on Monday announced it would quit the coalition at the end of the month following a dispute over the speed of the economic reforms.
The Socialist Party has only 190 seats in the 386-seat parliament, meaning that the opposition parties could force through a flat tax bill by banding together.
Hungary is ranked as having the second-highest tax burden for single people, behind Belgium, amongst the members of the Organization for Economic Cooperation and Development (OECD).
Many feel the high burden - made worse in 2006 when the government hiked taxes as part of its economic reforms - hits Hungary's regional competitiveness.
Hungary's tax wedge - the difference between labour costs to the employer and the net take-home pay of the employee - in 2007 was 54.3 per cent, according to the OECD.
This compares to 42.87 per cent in the Czech Republic, 42.81 per cent in Poland and 38.52 per cent in Slovakia.
The tax burden also credited with maintaining the huge black economy. Estimates of the size of the black economy vary from the official figure of 18 per cent of gross domestic product to as high as 50 per cent among some analysts.
