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Tax amnesty for investors in government bonds

January 3rd, 2014

Népszabadság calls the project a capitulation to tax evasion and deplores a police search in the home of a tax fraud whistle-blower. Meanwhile, fact-finding journalists continue their quest to either prove or disprove the whistle-blower’s allegations.

In its first front page editorial of 2014, Népszabadság condemns the offer made by the government to tax evaders, offering them a chance to buy government bonds and be exempted from any inquiry into the origins of their money. The author calls this offer an affront to honest taxpayers and an encouragement to all those who opt for the black market. In an aside, Népszabadság calls it typical of the way official Hungary now works, that while tax-evaders are offered an amnesty, the house of András Horváth, the tax fraud whistle-blower has been searched by police (See BudaPost, December 23, 2013 .)

Index runs a detailed report by Miklós Jenei about the origins of a kind of sugar sold by retail chains, which is about 10 per cent cheaper than average. He found scores of fraudulent companies, which have been closed down by the Tax Authority, behind the relatively low price. Jenei also shows that whenever one of those companies is closes down with huge debts on its account, a new one takes its place. In his introductory remarks he suggests that his findings corroborate Mr Horváth’s allegations.

According to Heti Világgazdaság’s Miklós Tallián, however, Horváth’s figures and analyses are flawed. The liberal commentator, who otherwise is highly critical of the government, illustrates how the 1000 billion (in another version 1700 billion) Forint VAT fraud alleged by Horváth would correspond to a turnover which is equivalent to the value of the total food retail trade in Hungary. Tallián also criticises Horváth’s description of the fraud mechanism, showing that the whistle-blower is not familiar with some basic concepts of enterprise accounting.

In Heti Válasz, on the basis of Tallián’s findings, Attila Michnai calls the whistle-blower utterly incompetent. He does not doubt that tax fraud exists, but suggests that Mr Horváth has failed to prove his case and put forward an alleged scheme in which figures do not turn round, for most of the links in the fraud chain reap practically no benefits. Since no one is likely to commit tax fraud completely selflessly, Mr Horváth speculated in an interview that that the main beneficiaries probably share their profits with those at the bottom of the chain. That claim is rejected by Michnai as proof of a complete ignorance about how fraud works, for people high up in the chain do not even know those below. In conclusion, Michnai believes that Horváth’s mistakes are a disgrace to the profession of tax supervisors.

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