Vol. 7 No. 2 (2014)

Changes in the personal income tax system in Hungary (1988-2014)

Published August 6, 2020
pdf (hun) (Magyar)


Gáspár, A. (2020). Changes in the personal income tax system in Hungary (1988-2014). Economica, 7(2), 23–33. https://doi.org/10.47282/ECONOMICA/2014/7/2/4327

Since its introduction, the Hungarian income tax system has been going through a continuous restructuring process. In my analysis I examine the main changes which have occurred in the Hungarian personal income tax system from the 1990s to the present day. I have also made a short international detour regarding the flat tax system as it seems that global trends also favor simplification. Flat-rate tax might interfere with the tax principle of equity, but it can ease
verifiability and the declaration of income for tax return and might help to decrease tax administration costs and tax evasion. The most successful reforms which resulted in the improvement of tax morale, transparency and increased tax receipts were the ones which involved the reduction of benefits and exemptions. I have examined how the annual changes in the personal income tax system will affect the tax burden of private entities.