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Restoring the Competitiveness of the Hungarian Tax System in the 2010s

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  • Nobilis, Benedek

    (Department of Tax Policy and Tax Analysis, Ministry of Finance)

Abstract

In the 2010s, significant changes were made to the Hungarian tax system to restore competitiveness. The focus of economic policy in the first half of the period was on addressing the adverse debt and labour market situation inherited from the previous decade, while in the second half of the period the focus shifted to boosting investment and increasing work productivity. The changes to the tax system focused on five main areas: reducing the overall level of taxation, shifting the focus of tax revenues from income to consumption, restructuring the taxation of labour income to encourage employment, reducing and restructuring business taxes to encourage investment and improving the efficiency of tax collection by exploiting the potential of real-time data collection. While the started changes are still underway in a number of areas, significant progress has been made in each of these areas. In addition to other factors, the changes to the tax system outlined above have largely contributed to Hungary entering the 2020 decade with much more favourable equilibrium, growth, employment and investment indicators than 10 years earlier. With regard to long-term trends, the COVID-19 crisis does not require a correction, and competitiveness factors may even become more important in the process of global economic rebalancing in the context of recovery.

Suggested Citation

  • Nobilis, Benedek, 2021. "Restoring the Competitiveness of the Hungarian Tax System in the 2010s," Taxation Policy Papers 3, Ministry of Finance, Department of Tax Policy and International Taxation.
    • Handle: RePEc:auo:moftpp:3
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