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Hungarian report Hungarian report
by Euro Reporter
2010-10-17 09:31:31
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Residents of Hungarian Kolontar village return home

Hundreds of residents of the village of Kolontar in Hungary started returning to their homes after being evacuated over the toxic burst at the local aluminium production plant. Meanwhile the Hungarian government promised to provide new homes for all people in the affected regions, who do not want or cannot return to their homes after the evacuation.  10 people died, while around 150 got injured as a result of the ecological catastrophe in Hungary.

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Hungary goverment submits bill on new taxes to fix budget


Hungary's ruling Fidesz party submitted a bill to parliament late on Friday which will impose a special tax on telecoms firms, energy suppliers and retail companies over a period of 3 years starting this year. Prime Minister Viktor Orban announced on Wednesday that the government would impose taxes on the telecoms, retail and energy sectors and suspend state transfers to private pension funds to meet its targets on budget deficit cuts. Parliament may vote on the tax legislation as early as on Monday.

According to the text of the bill posted on parliament's website, telecoms firms will have to pay 2 percent tax per year on net annual revenues of up to 500 million forints, 4 percent on revenues between 500 million and 5 billion forints and 6.5 percent tax on revenues exceeding 5 billion ($25.69 million). Retail companies will also pay progressively increasing tax, at 0.1 percent on net revenues between 500 million and 30 billion forints, 0.4 percent between 30 and 100 billion, and 2.5 percent above that level. Companies with annual sales of less than half a billion forints will be exempt from the new tax. While the new measures will likely allow the government to meet its deficit targets this year and next, the lack of expenditure cuts and structural measures have raised concerns over sustainability of deficit cuts, analysts have said.

They have also warned the measures could hamper recovery and could also discourage investors from expanding in Hungary.

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Every little helps


IT'S taken a while, but on Tuesday we learned how Hungary’s government plans to finance its way through the next few years. Ever since the country decided it could do without IMF and EU support three months ago, analysts have been wondering how Viktor Orbán, the prime minister, intended to meet the tight budget-deficit targets markets demand while fulfilling campaign promises to cut income tax and get his country growing again. His answer, it turns out, is to impose “crisis taxes” for up to three years on primarily foreign-owned energy, telecommunications and retail companies, divert pension-fund contributions into state coffers and renegotiate all ongoing public-private partnership (PPP) contracts. On top of this, in an attempt to raise the shrinking population’s fertility rate, the government will introduce a tax break for families with children. (There was no word on the swingeing public spending cuts that have been widely leaked, but that may come in another speech, scheduled for Monday.)

Announcing the new taxes, which should bring in an additional 520 billion forints ($2.67 billion) over the course of next year, Mr Orbán said: “For many long years we have been asking those without profits to pay more and more. Now it’s time for those with profit to give more. After the bank tax, we’ll introduce further crisis taxes... for a period of three years, in order not to hurt the poorest.”

The government intends to raise Ft61 billion forints from the telecoms sector, Ft70 billion from energy companies, and Ft 30billion from retailers. The new windfall taxes, which follow an already-announced annual Ft200bn bank tax, will attract the most attention. If nothing else, they show that Mr Orbán, whose populist conservative Fidesz party came to office six months ago, is not shy of treading on foreign toes.


      
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