Hungarian government eyeing Poland's retail tax

By bne IntelliNews January 27, 2016

Hungary’s government is eyeing Poland's efforts to introduce a new tax on retail chains in a bid to revive its own efforts for similar charges, a senior official in Budapest said in comments published on January 27.

Hungary's bid to return the legislation to its original format, which was shot down by the EU late last year, would deal another blow to the country's large supermarket chains, which are mostly foreign-owned. Retailers are already feeling the impact of a series of new laws that seriously affected their operations.

Kristof Szatmary, Minister of State for Economic Regulation at the Prime Minister’s Office, said that if the special retail levy planned in Poland is successful, the Hungarian cabinet might decide on a similar measure when discussions over next year’s budget start in the spring, Magyar Idok reports. The government may consider a new tax or an obligation to pay a fee on high-turnover “in order to achieve a more proportionate public burden sharing and to balance out market forces”, Szatmary said.

Poland's finance ministry said on January 25 it plans to impose a progressive tax on retailers with monthly sales of over PLN1.5mn (€336,000). The government hopes the move would boost budget revenues by PLN2bn. The tax rate would amount to 0.7% on monthly sales of up to PLN300mn and 1.3% above that threshold.

Budapest will be “watching the reaction of Brussels,” Szatmary said. Hungary had to modify a recently introduced food chain inspection fee after the European Commission said the progressive structure of the levy unfairly favours small retailers. Szatmary said the same ruling can be expected for the new Polish levy.

The Hungarian government has estimated that the suspension of the food inspection levy is costing the state HUF23bn in lost revenues, meaning that Budapest is looking for other ways to raise cash from the retail sector. It is now in the process of designing new legislation that would oblige large retailers to nearly double their staff. 

Many see the policies of the ruling Fidesz party in sectors such as retail, banking and utilities as dictated by the interests of domestic players. Critics accuse the party of close connections to domestic retailers, including CBA, Coop and Real, which mostly run small stores that duck under the restrictions.

Meanwhile, the statements only serve to confirm the growing relationship between Budapest and Warsaw. The new PiS government in Poland is in the midst of introducing several measures similar to those implemented by Fidesz over the past five years or so that it has held office. That has critics worrying the pair is developing an "illiberal axis" in Central Europe.

 

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