The Hungarian government is planning to cut income tax and social security contributions in a drive to create new jobs, Prime Minister Ferenc Gyurcsany said during a speech in parliament Monday, according to dpa. "Our main goal is to cut the burden and create jobs," he said during his annual "state of the nation" speech. Hungary is in the middle of a painful budget readjustment, which aims to cut the deficit from a starting point of 9.2 per cent of gross domestic product in 2006 to 3.2 per cent by 2009. The measures - which included tax and energy price hikes, cuts in spending, and reform to healthcare and education - have made the government deeply unpopular. Analysts had warned that the government would undo its good work on cutting the deficit so far by introducing tax cuts prior to 2010 elections, but Gyurcsany said that there was plenty of room to manoeuvre. "Our calculations show that we can definitely cut the tax burden by 200 billion forints (1.1 billion dollars) in the future without endangering our (fiscal) balance goals," he said. The government is already ahead of its fiscal targets - the deficit is expected to come in at 5.7 per cent for 2007, instead of the initial target of 6.8 per cent - and has already lowered the target for 2008. Gyurcsany said that if it was discovered that the government had more "wiggle room", then the extra funds would go toward further reducing the tax burden as well as cutting the deficit.
