Voice: State Secretary Zoltán Cséfalvay recently told an AmCham forum “We must launch a relentless crusade against red tape.” What specific steps will that crusade take?
Rétvári: Our goal is simplification. The cabinet has unified 14 governmental offices since January 1, 2011 on a regional level. The new county government offices provide for the competences of 14 former county offices, and coordinate for 18 others. Such reform, which would result in services provided by the government becoming more citizen-friendly, has not been seen in public administration since 1962 or the changes of 1990. On January 3, 2011 some 29 so-called government windows were opened all around the country that act as a customer service for these government offices. Citizens are able to settle 30 different affairs at the government windows at one time, thus lowering the burdens on them caused by bureaucracy. Based on the experience of the previous months, citizens are pleased with the simpler, friendlier and more patient service.
Voice: Hungary has long been seen as an overly bureaucratic country. How hard is it to change a mentality that makes the stamp all-important, rather than doing business well?
Rétvári: During the last year, the government has made enormous efforts to bring a positive change in approach to the public administration, since our goal is to create a service that acts not as an obstacle but as an engine for the competitiveness of the country.In the second half of this year a new public servant career model will be introduced. The main concept is that by making the performance of public servants measurable, a new more dynamic work ethic will be introduced to public administration. Also this year, a new code of ethics will be created, which will regulate the behavior and attitude of public servants beyond the law.Nevertheless, public administration can only be effective in the long-term if it can present an attractive career alternative to younger generations. Thus, for the first time, a Hungarian Public Administration Internship Program has been introduced, involving more than 260 talented young professionals, who will take part in a 10 month-long internship program, with a national and European phase. Our goal is to encourage these young professionals to utilize their knowledge and experience in the Hungarian public administration during the next decades.
Voice: In what areas is red tape being cut?
Rétvári: Last summer, the Government waived about 30% of the mandatory permits for businesses as part of one of the largest measures to increase competitiveness. For instance, an integrated authorization process was introduced to promote the investments of small- and medium-sized businesses. Another measure, under which businesses would no longer need to submit a heritage protection impact study during the authorization process of constructions, will further promote investments.
Voice: What is being done to help SMEs?
Rétvári: In order to promote small- and medium-sized businesses, the Széchenyi Plan was reintroduced after eight years. The plan has seven major areas: the Healthcare program, Developing a Green Economy, Homebuilding, Boosting Businesses, Research and Development, Employment, and Transport programs.The New Széchenyi Plan, which can be seen as the base of a new alliance between government and commerce, has a budget of HUF 518 billion for promoting business. Our goal is to create one million tax paying jobs during the next ten years, and thus eliminate one of the most serious competitive disadvantages of the country, the low level of employment.
Voice: How would you compare red tape and administrative burdens in Hungary with those of the country’s neighbors?
Rétvári: One of the cabinet’s provisions that came into effect on January 1, 2011 was the flat rate income tax and the family-based tax system. To date, this is the most favorable flat rate, proportionate family-based tax system, which acknowledges labor and childcare while making it possible for Hungary to become one of the most competitive economies in the region.The cabinet introduced a tax cut that significantly improved the competitiveness of the companies operating in Hungary; income tax was lowered to 16% from the previous 36%, corporate income tax (the part of the ratable value below HUF 500 million) was lowered to 10% from 17%, while social security deductions were lowered from 27% to 20% for mothers with young children.The government has already decided to lower 10 additional small-taxes that have previously put an abundant burden on companies, in order to further stimulate the economy. Among others we have abolished the alcohol tax on brewing, the upkeep charge for TV’s, the tourism tax that was payable after buildings, the communal tax for enterprises and estate duty for relatives in the direct line of inheritance..
This article was originally printed in the June issue of AmCham's membership magazine Voice under the title "Citizen-friendly simplification".
