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Tax hikes meant to open road to IMF talks

April 25th, 2012

Analysts agree that the new taxes announced by the government on the eve of Prime Minister Viktor Orbán’s meeting with EU Commission President José Manuel Barroso will be a heavy burden on Hungarian households. They are not sure however, whether the new restrictions will be enough to eliminate the hurdles preventing Hungary from starting negotiations on an IMF credit line.

In an interview on Info Radio, Szabolcs Vámosi-Nagy, a leading tax expert , welcomes the decision not to raise corporate taxes, but warns that new levies on consumption (e.g. banking transfers and phone calls) will slow down investment in those sectors, which may delay economic growth.

Népszabadság describes the government as a sniper shooting at anything that moves. In its front page editorial, the number one left-wing daily suggests the decision-makers have built a tax package consisting of numerous tiny particles, hoping that the population will not find them too heavy on a one by one basis, without adding them up.

In Magyar Hírlap, Csaba Szajlai, a long-time critic of the government’s economic policies (which is quite unusual for a pro-government daily), welcomes the fact that the government has not overestimated the expected growth this time, and could therefore put forward a realistic convergency report to the European Union. What a pity, Szajlai exclaims, that the cabinet did not start its term in office with such a realistic programme, as early as, say, the autumn of 2010. He also cautions against early optimism, since it is not yet certain whether or not some of the measures contemplated will be objected to by the European Union. But even if they are all accepted, and even if the government is granted the long-awaited IMF credit-line, Szajlai concludes, Hungary will not become a prosperous country at once. “That is when the real job will begin.”

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