Entries RSS Feed Share Send to Facebook Tweet This Accessible version

Further tax hikes

June 19th, 2013

Commentators across the political spectrum wonder about the possible reasons behind the restrictions announced by the Minister of the Economy.

On Monday, Economy Minister Mihály Varga announced further tax hikes on banking transactions, telecom services and capital gains. Banks will have to pay a surplus tax on their loans to municipalities. Varga said the measures are meant to compensate the loss deriving from low tax revenues caused by lower-than-expected inflation. The opposition parties say that there is no need for further restrictions since Hungary is already exiting the EU excessive deficit procedure. Népszabadság estimates that the new measures will increase public revenues by 170 billion Forints.

The proposed tax hikes will further slow down the economy, Miklós Bonta suggests in Népszava. The left-wing columnist believes that the proposed austerity measures are the result of “completely irrational” utility tariff cuts, since lower tariffs imply less taxes from such services. Bonta notes that the new restrictions will further increase the burdens on Hungarian families.

In its front page editorial, Népszabadság recalls that a month ago Mr Varga fiercely resisted further restrictions proposed by the EU. The left-wing daily also finds it highly problematic that the government is not willing to disclose if and how it wants to use the surplus revenues it expects from the proposed measures. In its concluding remark, Népszabadság speculates that the government might need the extra revenues to increase spending later this year, before next year’s elections.

In Magyar Hírlap, Csaba Szajlai also wonders about the possible reasons for the completely unexpected restrictions. The conservative columnist contends that the government wants to be on the safe side and make sure that it will meet the EU deficit threshold in order to avoid a renewed deficit procedure. Szajlai finds it unlikely that the government is preparing the ground for increased spending before the 2014 election. As a possible explanation, he mentions the government’s aim to repay the IMF loan taken by the former Socialist governments and by doing so, reduce public debt. This, however, may well be a counterproductive step, since the restrictions could further slow down growth, Szajlai adds. In an aside, he notes that the proposed restrictions suggest that the government’s economic path under Minister Varga will not be more predictable than under his predecessor, Mr. Matolcsy.

Tags: , ,