Before I begin today’s blog about Gyurcsány’s housecleaning I would like to do a little housecleaning of my own. I would like to repeat something that may not have caught everyone’s eye. At the end of one of my blogs I mentioned that I will not publish any Hungarian-language comments. Especially not the kind that calls for other people’s murder. I’m not joking. A person called on those who feel like murdering Jews to join him. This same person wrote another lengthy Hungarian language letter in which he verbally attacks several respectable people. He seems to be outraged by anyone saying anything about Hungary who doesn’t live there. I find myself in very good company, I must say. This person is wasting his time writing these lengthy harangues because not one line of them will appear on this blog.
And now let’s return to Gyurcsány’s housecleaning. He wasn’t joking when he came up with his forty-eight points and within them those that were designed to reduce corruption, the share of the black market in the overall economy, and the number of illegally employed workers. In addition, he promised to change party financing, tighten the conflict of interest laws in the political sphere, and revise the rules concerning parliamentary deputies’ declarations of assets. All these were promised on September 10th, at the opening of parliament. Yesterday the prime minister made another speech in parliament, and it seems that the government’s work is well under way because in October the legislative proposals will be brought up for discussion.
A few days ago I reported that at least four parties (the exception was the MDF) were outraged at the very idea that henceforward they would have to show receipts for expenses related to their jobs. Even Katalin Szili, the speaker of the House, took their side and in a letter to the prime minister expressed her opinion that this suggestion was not well timed. Maybe not, but by today it seems that all parties are ready to discuss the matter. The Hungarian electorate (of whatever political persuasion) supports Gyurcsány on this question. If the government is waging war against business people who refuse to give receipts in order to avoid paying taxes, one cannot overlook the almost four hundred lawmakers who are engaged in the same illegal practice. Perhaps even the members of parliament realize that, given the low esteem in which they are held, it is better to give at least the impression of upright behavior.
One of the most challenging items on Gyurcsány’s agenda is to reduce black market activity in Hungary. Gyurcsány quoted experts who estimate black market activity to be about 17 or 18 percent of the GDP, more than twice that in Western Europe. That translates into about 3,000 billion forints in unreported revenue and, when everything is added up, roughly a 1,500 billion forint shortfall in taxes collected. According to the prime minister, if in previous years the government had received this additional tax revenue there would have been no need for the recent belt tightening. Moreover, perhaps certain taxes could have been eliminated. He would like to reduce the 18 percent figure by half. He claims that this is not impossible because Germany and Austria, where at one point the black market share was just as high, managed to get it down to 6-8 percent. (Unfortunately, I don’t know how long a time period he is talking about.)
One thing is sure: the government’s tax auditors have to get cracking. And I can only hope that Hungarian software engineers have written sophisticated programs to identify potential tax evaders because the enforcement team is seriously understaffed. Right now there are only 300 people whose job it is to ferret out tax evaders; in a week another 100 will be hired.
In Hungary there are no criminal penalties for tax evasion. Perhaps this is a civilized approach to the problem, akin to the elimination of debtors’ prisons. But in the United States the threat of imprisonment for tax evasion is the ultimate deterrent. Business people who could play the odds of being caught and paying a fine are faced with jail time. Then the stakes change dramatically.
But, in the realm of the less dramatic, the financial penalties for tax evasion will be increased. In addition, those who employ workers illegally will have pay back taxes and other dues like health insurance. By the way, the illegally employed work force is estimated at 400-500,000! The total work force at the moment is less than 4 million! So, there is a lot to do but, given the promising results of the more serious checking of health insurance, I think it is not impossible. Maybe there will be a little more "order" in this "new order."