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Recent tax cuts in Hungary have been touted as “the largest since the regime change.” It sounds good, but bear in mind that there have been no significant tax cuts in Hungary over the past 15 years.

There are ways in which Ferenc Gyurcsány, the prime minister could make his tax cut proposals more than a silly season topic to fill summer newspapers for two days. He would make waves if he could show them to be credible and worthy of support without reservations. To do this, he would need to announce a radical restructuring of the Prime Minister’s Office (MEH), slashing its 2006 budget by 20 percent compared to 2005. At the same time, he could make a symbolic gesture by reducing the number of state secretaries in the MEH.

The PM could also announce plans to save taxpayers’ money by suspending government support for all those summer ‘parties’ which richly reward their organisers but which increase the strain on the budget by many tens of millions of forints. If it is worth outlining a five-year tax cut programme then it must surely be just as worthwhile to say a few words about comprehensive reforms in healthcare, public administration and education.

The tax cuts would be more credible if the current and previous government had done so much as lift a finger to reform an astonishingly wasteful, stricken healthcare system. State support for sport and culture - more accurately junkets for friends and clients – and ‘free’ government-funded events all serve to fuel a government addiction to ‘good works’ funded from deep inside our pockets.

Peter Hack

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