“Hungary rejects the introduction of socialist-style utopian economic plans through tax harmonisation and the communitisation of debt, but stands up in support of free competition and free trade within the EU”, Minister of Foreign Affairs and Trade Péter Szijjártó said in Budapest on Thursday at a conference organised by economic daily Világgazdaság.

Mr. Szijjártó stressed that EU tax harmonisation through the unification of member state tax policies would hinder competitiveness, while the communitisation of debt would distribute the debt caused by the undisciplined governance of certain countries. “Hungary reduced the debt accumulated prior to 2010 through extreme effort, not with the help of others, just as the reduction of tax burdens is also thanks to our strict economic policy”, he added.

The Minister said the reduction of taxes will remain a determining task in future years, explaining that he expects the reduction of the tax burdens on work to enable enterprises to finance wage increases and technological development projects. He also called for the expansion of tax subsidies relating to research and development, as well as the opening up of new resources and the further reduction of bureaucracy for small and medium-sized businesses (SMEs). “This is also called for by the fact that the ratio of Hungarian-owned companies within the domestically generated GDP is, although by not much, but less than 50 percent”, he emphasised.

According to Mr. Szijjártó, we must count on a global economic slowdown irrespective of its possible causes, but in recent years Hungary has become an attractive investment destination that is both economically and politically secure. He welcomed the fact that the region’s weight within the continent is gradually increasing in view of the fact that, as he explained, based on the data for this year four out of the five European countries with the highest levels of GDP growth are Central European countries, and three are members of the Visegrád Group (V4), with Hungary in first place.

State Secretary for Tax Affairs Norbert Izer from the Ministry of Finance justified the importance of providing funding to SMEs with the fact that 99 percent of Hungarian-owned companies belong in this group and they employ two thirds of the workforce, but their productivity and investment appetite is much lower. “Companies that employ ten or fewer people are also hit much harder by bureaucracy in view of the fact that their administrative burdens are no smaller than that of large corporations who employ hundreds of people”, he stressed. However, online solutions only lead to simplification if they are well-though-out and are developed for the whole tax system; the electronification of only the tax return and data reporting systems will only make the functioning of tax-paying enterprises more complicated, he explained. According to the State Secretary, SMEs can best be supported by the introduction of new tax types that are tailor made to suit them, rather than through the modification of existing tax types. “Providing them with incentives is also justified by the fact that developing SMEs will then also be able to become involved in investment projects, through which they will also help to maintain the increasing level of investment that is vital to continued economic growth”, Mr. Izer emphasised.