Hungary may completely abandon a special bank tax introduced in 2010 instead of only halving it beginning next year, earlier than planned, Orban told executives at the Austrian Chamber of Commerce in Vienna late yesterday. The bank tax will be replaced by a transaction tax, which may yield “huge revenue, probably more than what we are counting on in the current budget,” he said.
Orban’s government levied special taxes on lenders, retailers, and telecommunications companies in 2010 to plug budget holes and boost revenue after cutting the personal income tax rate. Hungary, which pledged to keep the special taxes in places for only three years, will introduce permanent levies on phone calls, insurance services and financial transactions this year and next as it seeks to push the country’s shortfall below the European Union’s 3 percent limit.
The abolition of the bank levy is “positive,” Marta Czajkowska, an analyst at KBC Securities, said in an e-mailed note to clients today. Initial positive market reaction “may be muted by uncertainties regarding the scope of increase in expected revenues from the transaction tax,” she wrote.
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