ruling coalition is discussing the possibility of using extra revenues brought
in from the black economy to cut taxes in 2009, the daily Világgazdaság said on Thursday.
an anonymous government politician, the newspaper said that informal
discussions over potential cuts were taking place between leading figures in
the Hungarian Socialist Party (MSZP) and the Alliance of Free Democrats (SZDSZ).
government this year began a drive to whiten Hungary’s economy, which some have
estimated as being as high as 50% of GDP. The tax authority APEH has stepped up
inspections and the Finance Ministry believes it can collect as much as HUF 100
billion (EUR 384.7 million) extra from previously black sources this year.
Minister Ferenc Gyurcsány has repeatedly said that the government would not cut
taxes in order to boost its popularity before the next general elections in
2010. However, with plans to cut the budget deficit on track and extra money
coming in from the black economy, government politicians could well use the
leeway to cut taxes, the newspaper said.
government’s popularity has fallen dramatically since last autumn, largely due
to austerity measures brought in to reduce the nation’s budget deficit, which
at 9.2% of GDP in 2006 was the largest in the EU. The already high tax burden
was increased as part of the measures, which were introduced shortly after the
coalition in April 2006 became the first government to successfully win
re-election since the switch over to democracy in 1990.
voters became even further incensed when a tape on which Gyurcsány admitted
concealing the true state of the economy pre-election was leaked to the press,
leading to large protests and pockets of anti-government violence. The
government has yet to recover its popularity, and the latest poll by Marketing
Centrum found that 54% of voters said they would opt for the main opposition
party Fidesz while only 32% said they would vote for senior coalition party the