Audit Office head suggests scrapping personal income tax

The head of the State Audit Office (SAO), Laszlo Domokos, in an article published by the daily Magyar Nemzet on Wednesday, said ideally personal income tax should be scrapped altogether, arguing that PIT was a burden on work and generally perceived as a "punishment".

On the other hand, national insurance covering the cost of pensions, health care and other benefits is seen as a down-payment on personal security rather than a burden, he wrote.

Domokos said the key to economic success was employment policy which, he argued, should enliven the labour market by tearing down barriers put in the way by the state. So taxes should be curbed as far as possible, he added.

The government has started this process, he said, noting measures such as exempting mothers who raise four or more children from paying PIT, while young earners won’t have to pay income tax up to the level of the national average wage. Also contributions paid by businesses have been slashed, Domokos noted.

Even with targeted tax forgiveness, given successive large wage hikes, the state has received more revenue from PIT, while because the black economy has drastically shrunk, revenues are now at a higher level more generally, he noted.

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