From a Hungarian forint trading point of view, the decision by President Lászlo Sólyom on the government's tax hike package will be determinate. The President has three options with the tax laws sent to him: 1) sign them, and laws will be announced thereafter 2) apply ‘normcontroll’, and forward the tax laws to the Constitutional Court 3) apply ‘political veto’, and return the laws to the Parliament for further discussion.
Whereas in the first case the planned tax hikes could be implemented from the beginning of September, in the second and third cases, the implementation of tax hikes could suffer some delay, implying that the Government’s original plans to reduce this year’s budget deficit through tax hikes by HUF 195bn could become frayed. The President might look at the tax laws on an individual basis, it is not necessary to tackle them as a package when deciding on them.
Earlier the President indicated that he generally supports all acts aimed at retaining financial stability in Hungary.
Trading reaction to the decision depends on which laws will be signed.