Here is a story a bit out of the twilight zone. Hungary is taking bold actions to combat its recession. Today, the parliament passed a tax law that will cut personal income tax rates to 17 percent rate and reduce the “social contributions” paid by employers to the government “to encourage employers to save and create jobs.”
Yes, the socialist Hungarian government realizes that letting business have more of their own money from production will allow them to hire more people. That is a jobs program. At least relative to eastern Europe.
Of course, cutting taxes is only beneficial when accompanied by spending cuts. The run-of-the-mill Marx loving, Lenin worshiping, French emulating socialist government generally doesn’t cut spending. By very nature of what a socialist government believes, it should be trying to maximise distributing government revenues through social programs. That’s why this, reported by Reuters, is such a stunner:
[Prime Minister Gordon] Bajnai’s government, which took office in April, has cut spending and kept the budget deficit in check. This has helped the forint [currency] to firm from all-time lows hit versus the euro in March, and helped rebuild some investor trust in Hungary.
This story reminds me of South Korea’s tax cuts back in January, which I blogged here.