Hungary introduced the highest, 27-percent, VAT rate in European Union. From 1 January 2012 the Act pushed through by the Hungarian Prime Minister Viktor Orban, entered into force. The Act increases the tax on goods and services. VAT increase is to patch the budget hole and help the Hungarians in the exit of the economic crisis.
VAT hike will cover most goods and services. Unchanged will stay the VAT rate on basic food products (18 percent) and for the press and books (5 percent). Increases introduction was previously endorsed by the European Commission.
The Prime Minister Orban wants to reduce the Hungarian budget deficit in 2012 to 2.5 percent Of GDP. VAT hike is one of the measures to help achieve this goal. Also, the Hungarian Economy Minister Gyorgy Matolcsy previously argued that the introduction of higher VAT would increase the chance of Hungary out of the economic crisis. At the same time the Hungarian government is also trying for a loan in the International Monetary Fund and the European Commission.
Before the introduction of the increase VAT rate in Hungary was 25 percent, which was also the highest in the EU. This rate shall also Sweden and Denmark.