Finance Minister Maria Fekter of Austria, whose lenders have criticized regulations in Hungary, said new plans for taxing bank transactions there are “exciting” and should be watched closely.
Hungarian Economy Minister Gyorgy Matolcsy “told me that Hungary is seeking a truly new way on taxes,” Fekter said at a conference in Vienna today. “The idea is exciting to tax the citizens’ income with only a 10, 15 percent rate, but tax bank transactions” to make up for lost revenue, she said. “We’ll have to watch closely how this will work out.”
Hungary this week backtracked on a vow to cut in half a 2010 bank levy and raised a planned transaction tax to 0.2 percent from 0.1 percent. The European Union’s most-indebted eastern member, seeking to plug budget holes caused by a flat 16 percent income tax, risks losing development funds unless it keeps the shortfall below the EU limit of 3 percent of output.
Austria’s Erste Group Bank AG, Raiffeisen Bank International AG and UniCredit Bank Austria AG are among the biggest lenders in Hungary. Raiffeisen Chief Executive Officer Herbert Stepic said yesterday that Hungary was his bank’s biggest “problem case” because of the high tax burden.
Fekter, who met with Matolcsy in Vienna yesterday, cautioned today against “bashing” Hungary.
Hungary announced the tax measures after the EU said the nation’s deficit may reach 3.9 percent of economic output, compared with the government’s 2.7 percent forecast.