"The government may not be able to introduce the flat 16% income tax rate without additional austerity measures, analyst Eszter Gárgyán of Citigroup has warned.International pressure will eventually compel Hungary to sign an agreement with the IMF, Gárgyán said, but the government will not announce any details until after the local elections on October 3.
She said Hungary will find that sources of credit are frozen if it does not meet the criteria set by the IMF and other creditors, because markets will lose confidence in the country.
The flat income tax rate might be cancelled as an offer to the IMF, she added.
Éva Várhegyi of research institute Pénzügykutató said there will be no need for austerity measures if the government does not launch a flat tax next year."
Source: Hungary Around the Clock.
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21.07.2010