Economy: the government removed the standing water well by splitting the hip in half

In the case of the hip, the government not simply cut the tax rate in half, but only maximized the high rate of 2 percent. Furthermore, the “relief” does not apply to all companies, only to those with a turnover of less than HUF 4 billion or a total balance sheet.

The regulation here is the reverse of the bite, since

many more companies have a turnover of less than HUF 4 billion than a larger one; however, according to the current situation, many small businesses and entrepreneurs have to declare that they are covered by the discount, while few large companies do not.

– The National Association of Hungarian Accountants (MKOE) requested its revocation already in December.

The hip also affects not only companies, but also, for example, sole proprietorships, who can also choose to pay a flat fee; in his case, the Metropolitan Municipality and the Hungarian State Treasury, which operated the municipal tax system, soon halved their taxes. Which, according to the MKOE, is an administratively favorable measure, but does not fully legally comply with the government decree on the hip halving. Essentially, because, in principle, great entrepreneurs can be cats at the same time, their cats should not automatically be divided in half.

In 2022, it may (also) affect local governments

The government has not changed the rule that companies must submit a request to the tax office (NAV) on a standardized form to reduce the advance to pay. According to the MKOE, there are a number of roadblocks in the process.

For example, there are bagatell things that

The first eight digits of the company’s tax identification number must be entered in the form, but there are modern subjects who do not have a tax identification number:

some primary family agricultural producers with a 10-digit tax identification number are subject to business taxes. Therefore, they are currently unable to request a reduction in the tax advance. There may be thousands of these taxpayers across the country, according to MKOE.

According to the government decree, all companies must make a declaration to the “fiscal authority of the local government of their registered office” – yes, but

not all sites on NAV are flagged as hot sites, and NAV must submit statements to the sites.

The companies pay an advance of taxes to the municipalities every year from the hip, so for now, only for the reduction of the advance notification is important. Any company that does not do so may be overpaid; Of course, you will be able to claim the overpaid amount, but it is questionable how, if there are such recoveries with your estate, how extremely stressed local governments will be able to meet with them.

The MKOE has compiled a long list of how many procedural and legal issues the government has introduced into hip reduction, which can be found here.

Now, should we save or stimulate the economy?

Question, what is needed for all this? According to the government, the fashion exemption is necessary to help businesses, and local governments must also help share the brunt of the crisis. But at least it is debatable whether, by partially freeing the hip, the state will support those companies that really need it. The hip is quite a complicated tax, companies basically pay by their turnover, but due to the elements that reduce the tax base, it almost acts as an income tax, which means that companies with little or no profit pay a lot anyway, so forgiveness is a bit of a help.

Hip liberation is an interesting step by the government as it is forcing local governments to save citing the crisis, but it is not saving at all.

In addition, the main responsible for the economic policy of the state have clearly stated that in the current crisis, state saving is not the way to go, since the artificial suppression of the economy due to the epidemic must be offset by spending, the actors economic must be maintained. afloat for the state. In fact, Governor György Matolcsy specifically chided the government for not spending enough on economic recovery.

Meanwhile, let’s say the government ran a huge deficit in 2020, which (and the drop in GDP) sent public debt skyrocketing, bouncing above 80 percent of GDP. For now, it’s hard to figure out exactly where so much money has gone from published data.

In any case, if there is no need to curb public investment and consumption (in fact the opposite is advisable), then the question is why fashion income (hence money that can be spent) should be deducted from local governments, as they are also part of the state. Or, if the way to go is to curb public spending, austerity is the way to go, then the government should save on both the private budget and the central budget under its authority.

They could even give the money directly to the companies.

Also, the whole public financial / economic mechanism of hip release is interesting. The government argues that the measure leaves money to companies, while at the same time depriving local governments of resources “through coercion.” However, the government automatically compensates settlements of fewer than 25,000 people and has set out to compensate the larger ones, albeit in a rather Machiavellian way. That’s it

Ultimately, the government gives municipalities the money they leave in hip-release businesses. It’s hard to see that there wouldn’t be a simpler way to do this transfer than a hip bleed from a thousand wounds.

Obviously, the government could exclude accountants and local governments with tax administration from the equation; of course, it would not be possible to tighten the neck strap of local governments or to favor some local governments while others find it impossible to administer them.

The gentleman gives, the gentleman takes

The affliction of the municipalities (opponents) may be due to political intentions, but it is also a fact that the governments of Viktor Orbán are very interested in pursuing objectives related to the redistribution of wealth and / or income through the tax system in the spirit of a “work-based society”. Thus, the family tax credit replaced the family allowance.

But an excellent example of this is the year since the outbreak of the epidemic, with countless economic operators receiving all kinds of tax and contribution cuts, tax and contribution exemptions, and possibly wage subsidies. What they have in common is that they have nothing in common, a group of economic operators defined in one way or another do not have to pay any public charges for a while, or at least not then and not as much as they should.

Another common feature is that ad hoc discounts often involve a lot of administration, as it is no longer a trivial question, who is covered by a discount and who is not, how it should be applied and how the discount period should be applied (for example in accounting). for other periods in which the discount does not apply. The administrative burden falls heavily on businesses and the accountants who serve them, but it is also likely that tax officials have had many sleepless nights as a result of government support measures built into the tax system.

When Fidesz does not make transfers through the tax system, it operates with unique benefits and with specific objectives, which it seeks to present as a kind of gift that comes from the government itself, and even from Prime Minister Viktor Orbán personally.

Perhaps the best example of this is overhead vouchers. The mystery surrounding the hippie is a good example of all, the government has taken income from local governments through the tax system; the promise is that they will negotiate settlements of over 25,000 people individually and provide them with individual compensation.