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IMF and Brussels could demand painful policy changes

July 12th, 2012

Commentators agree that the IMF and the EU will make the credit line agreement with Hungary conditional on significant changes in the tax code. But while a left-wing columnist believes that the IMF’s demands would benefit the lower classes, a pro-government pundit contends that it would only be advantageous for multinational firms.

According to Heti Világgazdaság, the IMF and the EU will, among other things, demand that the Hungarian government introduce a real estate tax, axe the flat income tax and abolish the surplus taxes levied on banks as a condition for the precautionary credit line agreement (see BudaPost July 9). PM Viktor Orbán, in an interview on Hír TV, has already ruled out both the introduction of a real estate tax and the cancellation of the flat tax.

The government has a bumpy road ahead, Népszabadság writes in a front page editorial. According to the left-wing daily, although the government desperately needs the IMF precautionary credit line, it would lose face if forced to introduce either of these measures in return for the loan. Népszabadság also believes that the possible IMF demands would benefit the lower classes and punish the wealthy, and thinks the government will find it hard to square this with its own social policy, which is described by Népszabadság as supporting mainly the upper middle classes.

“The European Commission and the IMF are about to interfere with Hungarian internal issues which have nothing to do with the country’s solvency,” Zsuzsa Vajda Nagy contends in Magyar Nemzet. According to the pro-government columnist, the conditions expected from the IMF and the EU show that the international organizations want to promote the interests of multinational companies. Vajda points out that the Hungarian government by levying surplus taxes on multinational firms and transaction fees on banks could help to ease the tax burden of the middle classes and boost the employment of the undereducated, the young and the old (see BudaPost July 4).

As for the negotiations, Vajda notes that it is crucial for Hungary to reach an agreement on the credit line because of the stagnating trend in European economies, but she finds it highly regrettable that the IMF is setting such a high price.

IMF and Brussels could demand painful policy changes
Commentators agree that the IMF and the EU will make the credit line agreement with Hungary conditional on  significant changes in the tax code. But while a left-wing columnist believes that the IMF’s demands would benefit the lower classes, a pro-government pundit contends that it would only be advantageous for multinational firms.
According to Heti Világgazdaság, the IMF and the EU will, among other things, demand that the Hungarian government introduce a real estate tax, axe the flat income tax and abolish the surplus taxes levied on banks as a condition for the precautionary credit line agreement (see BudaPost July 9). PM Viktor Orbán, in an interview on Hír TV, has already ruled out both the introduction of a real estate tax and the cancellation of the flat tax.
The government has a bumpy road ahead, Népszabadság writes in a front page editorial. According to the left-wing daily, although the government desperately needs the IMF precautionary credit line, it would lose face if forced to introduce either of these measures in return for the loan. Népszabadság also believes that the possible IMF demands would benefit the lower classes and punish the wealthy, and thinks the government will find it hard to square this with its own social policy, which is described by Népszabadság as supporting mainly the upper middle classes.
“The European Commission and the IMF are about to interfere with Hungarian internal issues which have nothing to do with the country’s solvency,” Zsuzsa Vajda Nagy contends in Magyar Nemzet. According to the pro-government columnist, the conditions expected from the IMF and the EU show that the international organizations want to promote the interests of multinational companies. Vajda points out that the Hungarian government by levying surplus taxes on multinational firms and transaction fees on banks could help to ease the tax burden of the middle classes and boost the employment of the undereducated, the young and the old (see BudaPost July 4).
As for the negotiations, Vajda notes that it is crucial for Hungary to reach an agreement on the credit line because of the stagnating trend in European economies, but she finds it highly regrettable that the IMF is setting such a high price.

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