Paper/Speech Details of Conference Program for the 19th NISPAcee Annual Conference Program Overview Fiscal Policy Author(s) Mihaly Hogye Corvinus University of Budapest Budapest Hungary Title Fiscal consolidation and the new flat rate individual income tax in Hungary. File Paper files are available only for conference participants, please login first. Presenter Abstract In the last two years the Hungarian people have witnessed several new measures in government’s fiscal policy. To respond to global crisis that hit Hungary hard, the Bajnai government enacted a series of economic reforms and spending cuts in 2009. The measures included reforms to the pension and entitlement systems, as well as tax changes to shift the tax burden from labor to wealth and consumption. In addition to cuts in taxes for businesses and employees, tax changes included raising the value added tax (VAT), and a proposal for the introduction of a property tax. The Orban government elected in 2010 launched economic programs designed to promote growth by reducing administrative burdens on businesses and lowering the tax burdens on small businesses. The plan also includes strict control of budgetary expenditures, and a „crises-tax” on different sectors which would remain in effect for minimum 2 years. One of the most popular plans seems to be the launch of a „flat-rate”individual tax replacing the existing progressive tax aiming to increase supply of labor and so tax base, to improve tax compliance and the reduce cost of taxation. The paper analyses the recent changes of the Hungarian fiscal policy from theoretical and practical views focusing on expected effects of the new measures.
