Hungary to reform fiscal management at local councils.

By bne IntelliNews March 10, 2011
Hungary's government mulls letting local councils introduce new taxes to improve their finances, while in return part of the revenues from existing taxes will be transferred directly into the treasury, Hungary AM reported, quoting Nepszabadsag daily. The taxes, whose revenues will be partially moved to the treasury include local business taxes and car taxes. The planned reform would be part of a programme for rationalisation of local councils management, which will consecutively lower the accrued budget deficit. Data released on Monday showed that Hungary generated a cashflow-based general government budget deficit of HUF 559.7bn (EUR 2bn), or 81.4% of the fullyear target in the first two months of 2011. The economy ministry attributed the significant deterioration to the considerable municipal debts. According to the plan, which will ensure more efficient local councils, all schools will be managed on government level, a change that is welcomed by many municipalities. The government also plans to transfer the current accounts of the municipalities from commercial banks to the treasury and restrict the amount of money the councils could borrow to cover operating costs.

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