Finance Minister Mihaly Varga – Photo: MTI

Finance Minister: Government in talks on supporting local councils hit by minimum wage rise

Hungary's government will continue to compensate local councils for a shortfall in their local business tax revenues, and is engaged in talks on easing the burden on them stemming from the increase in the minimum wage, the finance ministry said in a statement on Wednesday.

The government’s recently-announced tenders for 140 billion forints (EUR 383.5m) in funding to improve energy efficiency in smaller settlements aims to protect them from rising energy prices, the ministry cited state secretary Peter Banai as saying at a meeting with Karoly Szita, head of the Association of Cities with County Rights (MJVSZ).

The ministry noted that the government has cut the local business tax for small businesses to 1 percent. Settlements with populations under 25,000 will be fully compensated for the resulting revenue shortfall, while bigger cities will be compensated depending on their tax capacity, the ministry said.

The government is also weighing the possibilities for reducing the burden on local councils stemming from the increase of the minimum wage for unskilled workers to a gross monthly 200,000 forints and for skilled labourers to 260,000 forints, the statement added.

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