Crisis Hungarian tax reform package revealed

Crisis Hungarian tax reform package revealed Budapest  - Hungary's socialist government presented a new tax package to parliament on Monday which it hopes will make the country one of the most competitive in the region.

Corporate tax will be raised from 16 to 19 per cent, but because a "solidarity" tax on company profit will be scrapped, the de facto rate will fall from 20 to 9 per cent.

In a bid to promote job retention and creation, the government intends to cut employers' social security contributions by five per cent, Prime Minister Ferenc Gyurcsany said during his address at the opening of the parliamentary year.

The tax cuts will be funded by hiking VAT from 20 to 23 per cent, as well as increasing duty on cigarettes, alcohol and petrol.

In the longer term, Gyurcsany said the retirement age had to be increased from 62 to 65 by 2025.

In addition, Hungary's employment rate - currently among the lowest in the EU at 57 per cent of people of working age - must be raised to 65 or 70 per cent, Gyurcsany said.

The prime minister also called for a timetable for adopting the euro currency.

Talks on the crisis tax measures will be held with business and union leaders on Friday, said Gyurcsany, who added that the measures would be submitted to parliament from the end of the month. (dpa)

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