Parliament adopted on Monday a new tax on financial transactions, to come into effect in January. All opposition parties voted against. The legislation will impose a levy of 0.1 per cent even on routine matters such as deposits and standing orders, subject to a maximum of HUF 6,000 (EUR 20.78) per transaction. Thanks to a controversial recent amendment to the bill, the levy also applies, with no upper limit, to the Hungarian National Bank (MNB) and the state treasury.
Job creation programme
The government hopes to raise HUF 380 billion (EUR 1.31 billion) from the tax next year, crucial for funding a billion-euro package of tax breaks aimed at encouraging employers to hire the long-term unemployed. The MNB warned last week, however, that the National Economy Ministry may have greatly overestimated the likely revenue from the government’s latest turnover tax.
Antal Rogán of the governing centre-right party Fidesz had urged his fellow lawmakers to back the new financial transactions tax. “Please give your support to the proposal in order to be able to realise the job-creation plan,” he had said.
Apples and narancs
National Economy Minister György Matolcsy asked “is 0.1 per cent too much?” before the vote, telling the national assembly that in France the rate is 0.2 per cent.
Unlike the Hungarian version, however, the French levy only applies to buying and selling domestic securities, credit default swaps (CDSs) and high-speed automated trading. In the draft budget unveiled last week by the new socialist government of Francois Hollande, the financial transactions tax brought in this year under Nicolas Sarkozy would be doubled to 0.2 per cent.
The legislation has been staunchly opposed by the governor of the Hungarian National Bank, András Simor, who argues that it compromises the independence of the central bank. The government’s chief International Monetary Fund negotiator has acknowledged the issue is likely to be a sticking point when officials arrive next week for talks over a EUR 15 billion credit line.
At the same session on Monday, government lawmakers also pushed through a universal levy on insurance products. As evidenced by the EU’s highest rate of VAT, the government has repeatedly said it wants to shift the tax burden away from payroll taxes to consumption and turnover taxes.
Prevarication “cost billions”
Government foot-dragging over restoring the independence of the Hungarian National Bank has cost Hungary “billions of forints”, the opposition Socialist Party said last Friday. Socialist lawmaker István Józsa was speaking after his party backed amendments to the central bank law that the government drafted under pressure from the International Monetary Fund and European Union. That obstacle to a deal with the IMF could have been removed as early as January, Józsa said, and Hungary would not have had to pay a premium to lenders who see the country as a high-risk investment.