Hungary’s bank tax highest in Europe – analyst

Budapest, November 9 (MTI) – Hungary’s special banking tax is by far the highest in Europe, casting doubts on whether the government will be able to achieve its prime economic policy of stimulating economic growth, Political Capital, a firm of political analysts, told MTI on Tuesday.

On the basis of a comparative international analysis, it concluded the new tax, which is expected to generate budget revenue of 200 million forints per year, bodes a major risk for the medium term even if it seems to be an economic and political success story in the short term.

    The banking tax and levies imposed on the telecom, energy and retail sectors will only be collected until 2012, and the budget will see a shortfall thereafter unless the measures are renewed or others implemented, the analysts said.

    Doubts centre on whether a hoped-for pick-up in economic growth could offset this gap, they said. It is more likely that the government will plug the hole from funds it is expected to accrue from driving people from the private to the state pension system, they added.

    If the government keeps the banking tax in place beyond 2013 this would harm its credibility among economic players and shake the banking system’s financial stability, the analysts said.

    Hungary’s banking tax is unique, not only in terms of the high level at which it is set compared to other European countries, but also by the fact that Hungarian banks had not sought or received state bailouts during the financial crisis, Political Capital said.