Hungary's economy minister has asked the European Union to consider allowing a higher tax rate on luxury goods to help boost budget revenues.
Gyorgy Matolcsy wrote in a letter to EU Taxation Commissioner Algirdas Semeta released Wednesday that in case of a favorable decision by the EU, Hungary would weigh introducing a 35 percent value-added tax rate on luxury items. The normal VAT rate for most products in Hungary is 25 percent.
Lower-than-expected economic growth is forcing Hungary to increase tax revenues to meet strict budget deficit targets. The government has pledged to hold the budget gap at just under 3 percent of gross domestic product this year and at 2.5 percent of GDP in 2012.
