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PM Orban vows to stick to flat income tax
Hungary must maintain a flat income tax system in order to protect its middle classes, Prime Minister Viktor Orban said in his address to the nation on Tuesday.
Created: 8th February, 2012 14:42 | Last updated: 8th February, 2012 14:44

Orban dismissed the idea that wealthy people paid more tax with a higher tax rate, insisting this was not the "Hungarian reality". He said the rich always found a way of avoiding paying their taxes and the middle class ended up paying. He said for this reason the middle class must be protected by a "proportionate, single-rate" system. The new flat-tax would only be fully implemented in 2013, when lower earners, too, would be better off, he said.
Orban also said Hungary would have lost its economic sovereignty -- and it would be in the same situation as Greece -- but for the government's efforts to curb the public debt. He said the government had managed to rein in the public debt, even if the forint's volatility blurred the picture. Hungary could not feel fully independent as long as the public debt was high, he added.
The Szell Kalman economic plan has been 83 percent met, Orban said, adding that due to the government's pact with the banking association more than 160,000 people had been rescued from the debt trap, while burdens for many others had been reduced.
Orban said the year 2011 had been "overwhelming" for Europe and had exceeded all expectations. Dangers such as the bankruptcy of members of the euro zone, the demise of the single currency and the union itself falling apart were no longer in the realm of fiction, and an economic recession was a realistic danger, he said.