EU tax changes aimed at Hungary, says Finance Ministry

A proposal by the European Parliament to cap VAT at 25 percent is aimed at slashing tax revenues of the Hungarian budget, Deputy Finance Minister András Tállai said in an interview with Magyar Idők.

Tállai said the proposed changes would cause losses of hundreds of billions of forints to the state budget and were only aimed at destroying the competitive advantage Hungary has built up in recent years compared to fellow member states.

One of the proposed tax changes recently approved by the European Parliament include setting an upper limit of 25 percent on value-added taxes in the European Union. Hungarian Socialist MEP Tibor Szanyi was among those who drafted the proposal.

Currently Hungary is the only EU country with a VAT exceeding 25 percent (it stands at 27 percent), with some Scandinavian countries at 25 percent and all other member states below that threshold.

"It is very difficult to get used to the fact that Hungarian liberal MEPs keep serving other countries' interests, always at the detriment of Hungarian society," Tállai said

He added that the Hungarian taxation system was aimed at creating a competitive economy and increasing the budget for family subsidies, results the EU frowns upon.

"Some players in the EU frown upon tax reductions in Central and Eastern Europe - including those implemented in Hungary - and are determined to create a level field of taxation, thereby reducing the manoeuvring room of smaller emerging nations."

Tállai said Hungary has the lowest corporate tax rate in the European Union, the third lowest personal income tax and there are ongoing reductions for other taxes on employers as well. Brussels seems intent on increasing income taxes and do away with tax benefits after children. He said a 25 percent cap on VAT does not have any demonstrable economic reason and is solely geared towards eliminating the competitive advantage of Hungary.

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