From January 2011, Hungary will gradually introduce a single-rate personal income tax - Hungary's PM Viktor Orban said in a TV interview on Monday. Although the single-rate tax may take years to be fully adopted, it is meant to be a crucial pillar of a future tax regime, destined to make Hungary the most competitive economy of the CEE region. Speaking of the new bank levy (a point of friction during recent talks wit the IMF and the EU), Mr Orban repeated that the tax was necessary for Hungary to meet its commitment towards a 3.8pct deficit target by the end of the year.
The volume of retail sales - based on calendar-adjusted data - decreased by 4.7pct both in the first five months of 2010 and in May compared to the same period of the previous year. Compared to the previous month, the volume of retail sales decreased by 0.5pct according to seasonally and calendar-adjusted data.In the first five months of 2010, domestic retail turnover (including retail sale via mail order houses) was HUF 2,768 billion, out of which a turnover of HUF 605 billion was generated in May. In the first five months of 2010, non-specialized and specialized food, beverages and tobacco stores (45pct), petrol stations (17pct), furniture and household goods stores (13pct) played a major role in retail; the other stores had a combined market share of 25pct.
In July, GKI's economic sentiment index (adjusted for seasonal effects) remained unchanged. According to the survey conducted by GKI Economic Research Co. with the support of the European Union, this is the combined result of improving business expectations and deteriorating consumer ones.Expectations of households (which have been rising nearly continuously since May 2009, improving significantly early this summer due to last April's parliamentary elections) reached their peak just before the losses in the HUF in early June.In July the value of the index dropped to below May's level. Nevertheless, business expectations continued to grow and the level of the index is already higher than in September 2008, before the Hungarian exchange rate crisis.
Norwegian-owned Sapa Profiles, the world's largest producer of light aluminum profiles, laid the cornerstone of a new 8,000 sqm production facility in Szekesfehervar on Tuesday. The Hungarian government has channeled EUR 1.92 million of EU funding into the project worth a total of EUR 5 million. The new facility is expected to employ 80-100 new staff to be trained in cooperation with a local technical school. Speaking at the ceremony, Hungary's PM Viktor Orban said the project fits in well with the government''s ambitions to help companies create quality jobs by combining financial assistance with a steady supply of skilled labor.
Late on July 22, parliament approved a three-year bank levy which is to generate budget revenues of HUF 200 billion in 2010, including some HUF 13 billion in revenue from extraordinary bank taxes already in place. Banks are to pay 0.45pct of total assets, minus interbank deposits and loans. Savings cooperatives are to pay 0.15pct of total assets up to HUF 50 billion, and 0.5pct over that amount.Insurance companies are to pay 6.2pct of revenue from premiums, excluding that from re-insurance. An amendment to the package of legislation that would have made insurance companies established after June 1, 2007 exempt from the tax, was annulled at the last minute.
Hungarian-owned Hajdu Hajdusagi Ipari has completed a HUF 780 million investment to expand and improve water boiler production capacity at its plant in Teglas, CEO Anna Novotni-Dede said at a press conference on July 23.Hajdu Hajdusagi Ipari paid for HUF 392 million of the investment with its own resources, according to Mrs Novotni-Dede. European Union funding covered HUF 273 million of the cost and the company took out a loan of HUF 115 million, she added. Hajdu Hajdusagi Ipari employs 650 people.
Prime Minister Viktor Orban has stressed the improtance of a pan-European agreement to stengthen the fiscal stability of the 27 nations, with Economy Minister Gyorgy Matolcsy emphasizing the importance of stability in the framework of an independent Hungarian economy.Both pointed out that fiscal stability and this year's 3.8pct deficit target are primary objectives, including the reduction of the state deficit from 80 to 60pct. According to Mr Matolcsy, 2011 and 2012 will be dedicated to the restructuring of the economy, a position that the government is holding firm on the fundations of tax reduction. Meanwhile, Mr Orban characterized the talks with IMF as "insignificant and secondary" and put a common European effort at the forefront of his analysis, according to which instead of a bilateral negotiation between Hungary and the EU, a multilateral agreement of the nations would seek to mitigate the deficits of the Union members. The PM says that Hungary must reduce its deficit in the medium term under 3pct (a Maastricht criterion), and meet its 3.8pct deficit goal. "We hope economic growth next year will be above 2pct ... and we plan further tax cuts that will boost the economy, so we have a good chance that, based on the agreements with the EU, Hungary will again become a successful country," the prime minister went on to declare.
The Beijing office of the Hungarian National Tourist Office (HNTO) has just launched a course for Chinese travel agents about Hungary's tourism attractions. 'Students' on the course are those MICE experts who visited Hungary this May, alongside other representatives of travel agencies. After the course, the Hungarian ADS agencies and the members of the China Club will receive contacts for those offices.Chinese tourists spent 23,525 nights in Hungarian public accommodation establishments in January-May; the number of nights is 1.6pct higher compared to January-May 2009.
According to Jato Dynamics, Hungarian new car sales have fallen again in June (down 28pct on June 2009) dragging down the overall year-to-date figure, which decreased by 45.9pct compared with the same period last year.European sales also decreased in June by 6.5pct; in January-June the market edged up by 1.1pct. The continued weakness in German and Italian new car markets (down 32.3pct and 19.1pct, respectively) is the main contributing factor to lower sales volumes, which is also affected by the lack of strong Central and Eastern Europe economies.
Germany's leading motoring club (ADAC) has just published its updated 'travel package' to Budapest.The new Reiseführer contains a detailed guidebook, a map and a 65-minute audioguide presenting the main attractions of the city, with interesting stories, music and interviews. German tourists spent 646,394 nights in Hungarian public accommodation establishments in January-May; this is 1.2pct lower than in January-May 2009.
portfolio.hu Raiffeisen Ups Target Price for Hungary's Richter"Raiffeisen has on Tuesday raised its target price for Hungary's leading drugs producer Richter to HUF 48,500 from HUF 45,263 previously, while it left its 'Hold' recommendation unchanged." Click here to read Bloomberg Hungary Sells More Treasury Bills than Planned at Auction of 3-Month Debt"Hungary today sold HUF 50 billion ($228 million) of three-month Treasury bills, HUF 5 billion more than planned, at an average yield of 5.46 pct..." Click here to read
Local Business Tax Matters Devolve Back to Local GovernmentsCertain aspects of local business tax were amended by parliament's adoption of Act LVII of 2010 on June 21, 2010. This new regulation places matters related to local business tax back with local governments as of June 29, 2010, which means that from that date, businesses will need to pay all their tax obligations to the competent local tax authority. Read further information here
Dilemmas of Transition: The Hungarian Experience (1999)edited by Barany, Zoltan & Braun, Aurel From general issues to specific analyses on problems surrounding political and economic transition of post-Communist Hungary. Click here to read