The New Hungarian Prime Minister Increases VAT
A VAT increase, freezing salaries and reducing subsidies are among measures taken by the new government in Budapest.
Bajnai Gordon, 41 years old, the new Hungarian Prime Minister, will increase VAT from 20% to 25%, but will decrease taxes on wages and income. Bajnai said that the modifications of a tax are designed to boost job creation and to bring legally of companies that operate in the gray economy, writes Bloomberg.
VAT increase would worsen the recession because it will reduce more consumption. The government expects the economy to decline by 6% this year, compared to minus 3.5% previous estimate. Hungary will cut from spending by 5.7 billion U.S. dollars by the end of next year; to keep the budget deficit below the 3% required for calling the financial aid.
“I protect Hungary against the crisis”
“Is a crisis plan. The goal is the protection. Protecting jobs, families, small enterprises, in a final to protect Hungary against crisis “; said Bajnai.
To reduce costs budget, the government led by Bajnai has decided to renounce to the thirteenth salary for employees of state and to similar benefit for pensioners, freezing salaries and reducing administration costs such as social compensation received for medical leave.
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