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Deputy Fin Min: Socialists Would Cause Thousands of Wage Cuts

MTI-Hungary Today 2021.01.06.

A large tax hike proposed by the Socialists would likely result in a wage cut for hundreds of thousands of people and job losses for tens of thousands, András Tállai, the deputy finance minister, told daily Magyar Nemzet.

Tállai was commenting on a recent article by Socialist (MSZP) politician Imre Szekeres in daily Népszava who said his party rejected tax cuts proposed by other opposition parties.

Szekeres, a former defense minister, criticized the government’s halving of the business tax, and he also advocated for the 15.5 percent rate of social contribution tax paid by businesses to be raised to 18.5 percent. This, he argued, would protect payments into the health-care system as well as protecting pensions.

Tállai noted that in 2016 representatives of the government, trade unions and businesses signed a multi-year wage agreement which resulted in wage increases offset by the state reducing employment taxes, from 27 percent to 15.5 percent. The two go hand in hand, he said. If employment taxes grew, then net salaries would stagnate, even if companies spend more money on wages, he added.

He said that in a crisis, most employers were unlikely to make sacrifices on wage costs, so if social contributions increased, businesses operating on tight margins would cut salary costs by laying off some employees.

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The three percentage point increase, he said, would amount to extra burdens on businesses of 500 billion forints (EUR 1.4bn). The deputy minister added that it was “interesting” that Szekeres expressed concern about pensions just as the government was introducing a phased restoration of the 13-month pension that the previous Socialist government was responsible for scrapping.

Featured photo illustration via Attila Kovács/MTI