Demonstration against the introduction of the new kata-law in Budapest - Photo: MTI

Opposition parties ask president not to sign small business tax law

Lawmakers of the opposition Socialist, Jobbik and LMP parties on Wednesday appealed to the Hungarian president asking Katalin Novak not to sign the new law on the Itemised Tax for Small Businesses (kata).

Parliament adopted on Tuesday the amendments to kata regulations which raises the income threshold for taxpayers to 18 million forints (EUR 44,000) per year from 12 million, and restricts the circle of eligible entrepreneurs. According to the amended legislation, kata taxpayers will continue to pay a flat monthly rate of 50,000 forints instead of corporate or payroll tax. Income over the 18 million threshold would be taxed at a rate of 40 percent.

Kata will be available for sole proprietors from September 1. To eliminate hidden employment, only entrepreneurs providing services and goods for private customers will be eligible. The sole exception are taxi drivers, who could remain within kata while providing services for companies too.

In an open letter to Novak, Socialist co-leader Bertalan Toth said the law passed hastily “does not serve predictability”, insisting that “the livelihood and security of 450,000 people cannot be turned upside down just in 24 hours in the middle of the year”. He said it was crucial to protect families “in an unstable situation triggered by the war and with a record high inflation putting extra burdens on them”. He said Novak is “facing to take a decision that will show whether the president represents the unity of the nation and the interests of families or serves a political party”.

Lawmakers of LMP said the new kata law means a significant tax increase in the form of an austerity measure. “It will put out of business small entrepreneurs like electricians, physiotherapists or couriers while not putting any extra tax burden on large companies such as Mol, Audi, Richter or BMW,” LMP’s spokesman Jozsef Gal told a press conference. He called for increasing the corporate tax rate and introducing a double-digit personal income tax and an asset tax on large companies.

Anita Korosi Potocska, Jobbik’s deputy leader, told a press conference that small entrepreneurs unable to pay their taxes under the new kata regulations would increase their prices making their customers to pay in the end for their increasing public burden. Lawmaker Daniel Z Karpat called on the government “to include in sharing the public burden multinational companies it constantly indulges”.

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