Hungarian National Consultation 2012 in English vs Economy
What do you think?
Please fill out the questionnaire.
- There are individuals who suggest that Hungarian companies operating with less than 20 workers shall be entitled to a flat rate in terms of their taxation, because the chances are higher that this way they can keep their workforce during the (financial) crisis. Others believe that there is no need to protect small companies this way. What do you think?
Option number 1: Small companies contribute to do the daily living of people; therefore the flat rate in terms of their taxation should be available in order for them to be able to operate during the (financial) crisis.
Option number 2: Help not meant to be given for small companies in the form of flat rate taxation, because in an economy equal opportunities/chances shall be given.
Option number 3: I cannot judge the question.
My personal comments unavoidably containing a large part of subjectivity but only focusing on Economics not politics.
There is an assumption in the above question that flat rate based taxation would help small companies within the crisis and the economy would benefit from higher employement. Let’s take the Credit Crunch as an example just for the time being. What happens in a financial crisis? What happened during the Credit Crunch? There was an overwhelming supply of properties exceeding demand. Key points are Supply and Demand. Assumptions made in the above question suggests that cutting taxes for small businesses will result in production and pre crisis level employment. In terms of production if there is no adequate demand available within a market economy, production is most likely to stop or just produce cash tied up in stocks; in terms of employment, having a company producing goods way above the actual demand will unavoidably have an adverse affect upon its employment, because producing cash tied up in stock won’t pay the salaries of the employees. Instead of focusing on flat rate taxation why one is not looking into the opportunities to increase demand. Many ways to increase demand in a market economy in ways of taxation, surely a 27% VAT is not the best option to achieve that. Let’s take a look at a German example to increase demand, the reader is most likely to be aware that Germany is heavily relying upon its industries and car production. Germany allowed citizens to pay less tax upon new cars, resulting a higher demand. These are the type of initiatives I am failing to see in Hungary at the moment. Obviously in the situation of Hungary we do not need cars but we definietly do not need a 27% VAT and questionnaires suggesting increased employment within the crisis by flat rate taxes for small companies whereas demand is all time low.
