Further Tax-raises in 2008

Created: 25th November, 2007 22:40	print	send

At a press-conference on Friday, Mr Navracsics summed up the results of the past half decade of government policies in Hungary: while in 2002, the country was the leader of the group of states awaiting EU-accession, and its perky economy granted it a favorable position even among those that were developing most dynamically, after five and a half years of socialist-liberal governance, Hungary was only bringing up the rear. "A soaring level of budget deficit and public dept alongside with a sluggish economy means we continue to lag behind instead of catching up. This has been characteristic of 2007, and the trends seem to continue in the next year as well", said the leader of the parliamentary group of Fidesz.

Mr Navracsics quoted the convergence plan's forecast for an improvement of economic indicators by the second half of the incumbent government's term, a prediction he said to be falsified by the fact that in terms of GDP per capita Hungary today not only trailed behind Central-Eastern European countries but also those Baltic states whose economies had previously been weaker but by now have taken the lead ahead of Hungary.

Contrasting the government's plans with reality, Mr Navracsics said that while the cabinet had previously planned a 3-4% rate of economic growth for 2007, the figure in reality will reach a mere 2,2% by the end of the year. According to analysts, it may even turn out to be lower than that, meaning that the government not only overestimated the economic growth but that it would not even be half of what had been foreseen. "Inflation was originally intended to be at a level of 6.2%, but by now a 7.5% rate is taken into account", he added.

Moreover, the updated version of the cabinet's convergence plan includes calculations regarding further raises in tax-level for 2008, meaning that the Hungarian tax-burden, despite being the highest in the region according to international analyses, would increase further.

"2008 will be a difficult year as well, we are getting deeper and deeper into an economic and social crisis while the cabinet of PM Ferenc Gyurcsány is doing nothing to handle the situation", concluded Mr Navracsics.

Answering to a question inquiring about the statement of the ECB's president appraising the Hungarian government's reforms which Mr Trichet called "the bravest" in Europe, the leader of the parliamentary group of Fidesz said that this evaluation could be understood since the objective of the ECB and its president was that a country should comply with the Maastricht criteria as soon as possible. "On the other hand, a politician does not only have to meet certain monetary expectations but the consequences of such decisions have to be kept in mind as well."

"Whenever a politician decides, there are two further conditions to be considered: the steps needed to reach a stable economic growth and the price the society would have to pay as a consequence", stated Mr Navracsics, adding that the austerity measures of the cabinet had drastic results within the society and at the same time impeded the country's economy. "Therefore the policies that impoverish half of the Hungarian people cannot be deemed helpful by any means", concluded the leader of the parliamentary group of Fidesz.