Hungary Parliament approves 2013 transactions tax

Hungary's Parliament passed the controversial Financial Transactions Tax Act on Monday. The bill won a  victory with 249 MP's voting in favor of the proposal vs. 94 against. Members of the government and the governing Fidesz Civic Party cited the proposed HUF 300 billion action plan for job creation that makes a transaction tax unavoidable. In a subsequent vote, MPs approved a new, universal insurance tax.
The main opposition Socialists said on Monday that the planned introduction of a financial transactions tax is unacceptable because it will most burden the poor and not speculators. Deputy group leader István Józsa said that instead of introducing the new tax, which is expected to be approved by parliament later on Monday, the government should improve economic performance.
Far-right Jobbik said the effect of introducing the new tax will be contrary to what the government expects. In addition to making Hungarians poorer, it will hinder economic performance and also hold back corporate lending, deputy group leader János Volner said.
LMP lawmaker András Schiffer said in the debate that the tax was levied on financial transactions indispensable for the real economy, while interbank and securities market operations would be exempted, which would lead to more speculation. “Fidesz has sided with the speculators,” Schiffer said. Gabor Scheiring, another LMP lawmaker, said in a statement sent to MTI that “the government majority should withdraw the tax and redesign it”. Scheiring called the transactions tax “unjust and amateurish” and insisted that it would heavily weigh on everyday payments of residents and small ventures.
Economy Minister György Matolcsy responded to opposition criticism of the transaction tax proposal by saying sceptics have overlooked an important detail - the fact that there is a recession. "The largest part of the eurozone is struggling with deep recession. The European Union is getting increasingly embroiled in a crisis," he said. "Transaction tax, bank tax, crisis taxes, pension fund restructuring are all about each country's individual crisis management choices. There are countries that opt for austerity measures. But those that adopt fiscal restraints have no room to do anything more. Hungary made a better choice than others and decided to go for unorthodox measures of crisis management," Matolcsy explained the need for a financial transactions tax after the decisive vote in Parliament. "We are now able to cut payroll taxes by nearly HUF 1,000 billion. Thanks to the proportionate flat-rate income tax regime, taxpayers have saved HUF 400 billion so far, and will save another HUF 100 billion or even more next year. By lowering the corporate tax rate to 10% we have reduced the tax burden by HUF 150 billion. And now we have embarked on yet another action plan, which will ease the financial burden on small businesses and corporations by another HUF 300 billion," the Minister said. "We are relieving those that create jobs of a HUF 1,000 billion burden."
Matolcsy has also reminded that the government had found a way to bankroll earlier programs: the bank tax has brought in HUF 200 billion per year, crisis taxes generated HUF 160 billion per year, while the pension fund reform filled a HUF 400 billion hole in the budge. "Is 0.1% too much?" the Minister asked, noting that the corresponding tax rate in France is 0.2%. "For a family with expenses totaling HUF 200,000, the tax amount if HUF 200. With tis HUF 200 we will create the basis for a significant job protection program". Talking of extending the scope of the transactions tax to the NBH, Matolcsy declared it was "not the government's business to think for the National Bank of Hungary." "However the NBH is part of Hungary's financial system. We believe the funds sitting there, a total of HUF 4,500 billion, should be subject to the transacton tax," the Minister emphasized. "For this reason, I am asking you to vote in favor of the proposal without hesitation," Matolcsy said prior to the vote.
Source: MTI,

Last Updated on Friday, 30 August 2013 09:11