OECD report says Hungary should cut tax on labor
Hungary has launched structural reforms to reduce public debt which is in line with the economic policy recommended by the OECD, the economy minister said at an OECD event on Thursday.
The OECD has published a report, suggesting that Hungary should reduce tax on labour and offset cuts with higher real estate taxes and by widening the tax base.
Matolcsy said Hungary is on the right track, employing a mixture of traditional and unorthodox economic measures, outlined in its Szell Kalman reform plan.
Angel Gurria, General Secretary of OECD, praised the Szell Kalman Plan at the event and said it contains ambitious steps in the right direction in several areas. Most of the OECD’s recommendations are contained in the plan, he said.
Gurria said the OECD’s position is that private savings and self-sustenance should be encouraged in Hungary and that sectoral taxes were not the way to go to create a stable tax system. He added, however, that the tax levied on the energy, telecoms, retail and banking sector were introduced on a temporary basis and the Hungarian government had said they would be phased out gradually.
In the report, the OECD attributed the “substantial” gap between Hungary’s gross domestic product (GDP) and the OECD average to big shortfalls in labour productivity.
“Progress has been made to raise labour supply through reductions in the tax wedge on labour income and incentives to retire early, but more needs to be done (…) in order to raise productivity growth,” the report said.
The OECD said priorities for Hungary should be reducing disincentives to continued work at older ages, easing business regulations and reducing the tax wedge on labour income. Other key priorities mentioned included improving the efficiency of the education system and the public sector.
read whole article OECD report says Hungary should cut tax on labor: Realdeal.hu.
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