Economics

As requested by Prime Minister Ferenc Gyurcsány, the Finance Ministry is investigating the possibility of switching to a VAT system with a flat tax rate, business daily Világgazdaság reported. According to the newspaper's unnamed source, the ministry is skeptical about the proposition because a 19% flat rate, which would equal VAT rates in Slovakia and Romania and thus be ideal for Hungary's competitiveness, would result in Ft 400 billion revenue loss for the budget. The problem with Hungary's VAT system does not consist in having three different tax brackets but in the fact that the standard rate is 25% while in most EU countries it is about 20%, Gabriella Erdős, tax partner of advisory firm PricewaterhouseCoopers Kft opined. (Vg 1) P.P.

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