Hungary to Exempt Interbank Transactions From New Financial Tax

Hungary’s financial transaction tax, to be introduced in 2013, will exempt interbank transfers from the levy, according to the text of the proposal posted on parliament’s website.

The tax, which the government expects to yield 130 billion forint ($575 million) a year in revenue, will affect corporate and household bank transfers and be levied at a rate of 0.1 percent, according to the draft. Cash transfers initiated through postal services will also be taxed while transactions with securities will be exempt.

Hungary approved taxes on banking, telecommunications, energy and insurance companies last week to allay European Union concern that its budget is unsustainable and to retain next year EU grants that the bloc partly froze in March. The government is shifting levies toward consumption after the EU said it relied on one-time measures to mask its budget gap.

The government may consult with banks in the coming weeks about the financial levy, Antal Rogan, the ruling Fidesz party’s next parliamentary leader, told TV2 today.

The tax contravenes an agreement struck with banks last year and threatens economic growth as it makes credit more expensive, the Bank Association said on May 9.

To contact the reporter on this story: Edith Balazs in Budapest at ebalazs1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net