Hungary Plans to Extend Special Taxes to Tobacco Firm

Source from:  Reuters 11/17/2014

Hungary plans to extend a special tax on revenues, which has already curbed the earnings of several multinational firms, to tobacco companies next year, according to a proposal by ruling party Fidesz lawmaker Kristof Szatmary.

A bill submitted to parliament late on Thursday proposes that tobacco firms pay a health care contribution based on their 2014 net sales, with the highest tax rate of 4.5 percent imposed on revenue above 60 billion forints($244.25 million). The tax is on top of the normal tax rate paid by all companies.

Based on 2013 net sales, the local unit of Philip Morris would pay the highest contribution, about 6.38 billion forints ($26 million), followed by British American Tobacco which would pay 3.36 billion forints, the business news website portfolio.hu said.

Szatmary said in the bill that the special tax on tobacco companies would be a one-off and that competition would prevent them from passing the costs on to customers.

The government, in power since 2010, has also imposed special taxes on banks and telecoms, energy and retail firms, to finance personal income tax cuts and keep its budget deficit below the European Union threshold of 3 percent of economic output.

Affected companies and international institutions have criticized the taxes, saying that they would weigh on investments and economic growth. Enditem