Hungary's Orban presses ahead with fiscal reform

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Hungary's Orban presses ahead with fiscal reform

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The Hungarian parliament on Friday passed controversial fiscal reforms despite pleas from the EU and IMF for the country’s centre-right government to postpone the vote.

Prime Minister Viktor Orban’s Fidesz party wanted to change the law to cement a 16 per cent flat income tax that ministers argue is needed to boost the economy.

The so-called ‘Economic Stability Law’ also postpones until 2016 a constitutional rule to cut the public debt every year until its reaches 50 per cent of GDP. It currently stands at 80 per cent.

Attila Mesterhazy, the leader of Hungary’s Socialist party, said the polices carried out by Fidesz under Orban’s leadership are “life-threatening”.

“They are not promoting the rights of the Hungarian nation. This is capital treason,” he told reporters after the vote.

Any future changes will require a two-thirds majority in parliament.

The IMF and EU, from whom Hungary is seeking a 20 billion euro credit line, fear future governments will have little room for manoeuvre in managing the country’s finances.

The approval of the new law sparked protests outside parliament in Budapest. Orban’s predecessor as premier Ferenc Gyurcsany was one of those demonstrators briefly detained by police on Friday.