The pro-growth tax regime has been a major factor behind the performance of the Hungarian economy. The pro-transparency and pro-business elements of this system may serve as models for other member states, Minister of Finance Mihály Varga said at a meeting of EU finance ministers in Bucharest.

According to the view of the Hungarian Government, it is a sovereignty right of member states to adjust their tax structures to their own economic and social circumstances, the Minister pointed out.

The essence of the economic policy paradigm shift of recent years was to gradually shift the focus of taxation from levies on labour and capital to levies on consumption, which system boosts growth and does not distort the structure of the economy, Mihály Varga noted, adding that the achievements of the economy have been attributable, among other factors, to this attitude.

Efforts to boost and extend cooperation regarding the fight against VAT fraud could substantially improve the competitiveness of the European Union, he said. Hungary does not support the introduction of a common corporate tax base and own funds, as it would adversely affect Hungary’s budget.

Several measures aiming to improve economic transparency have recently been implemented in Hungary, such as on-line cash registers, on-line billing, the on-line connection of vending machines, and the Electronic Trade and Transport Control System (EKÁER). The elaboration of similar measures, which help the efficiency of tax collection, would be the right direction of the EU’s tax policy, Mihály Varga said. The Government of Hungary agrees, on the other hand, with increasing the role of taxes aiming to improve the protection of the environment and health, he added. The application of these taxes may reduce the number of activities harmful for the environment and human health as well as the number of harmful products.

(Ministry of Finance)