Employers criticise plan for action groups to survey flat-rate tax impact

Budapest, February 16 (MTI) – Business-sector employers have expressed criticism of the plan of the governing party’s parliamentary group to establish action groups to survey the impact of the new 16 percent flat-rate tax, MTI said.

Prime Minister Viktor Orban said on Monday that action groups will be set up to see whether or not private sector companies abide by an agreement on the guaranteed minimum wage reached at a meeting of the National Interest Coordination Council late in 2010.

    At the meeting, unions insisted a clause be added to the agreement promising employees’ “real position” would remain unchanged in light of changes to taxes and contributions.

    Orban also noted on Monday that the government took steps to top up wages for public-sector workers who would have taken home less pay because of the tax changes and had mandated similar steps at majority state-owned companies. Orban said the cabinet would take action to ensure that payments do not decrease even in the private sector.

     Ferenc David, head of employers’ organisation VOSZ, told MTI that the organisation could not understand the legal basis upon which the prime minister expects to make employers observe the wage rise recommendation of the National Interest Coordination Council (OET) when that has no binding force. The agreement also says that competitiveness and income position must also be taken into account when setting wages, he added. The security of employment must also be one of the key criteria in wage negotiations. Companies that cannot afford to raise wages by 4-6 percent may elect to exempt themselves from the stipulation, David noted.

    David said the government had not consulted employers on the wage compensation for any losses in net wages resulting from the new tax system.  

    He emphasised that, at the time of the wage agreement, it could be seen what the tax system would be like in Hungary from 2011 and that the tax system would have winners and losers. The tax system was passed by parliament and now the government is trying “to shift the responsibility onto the employers of the business sector”.

    The government introduced a 16 percent flat-rate personal income tax and eliminated many tax allowances from the start of 2011.