September 26, 2013 / 4:44 AM / 4 years ago

Hungary's leftist opposition to offer business new deal

BUDAPEST (Reuters) - Hungary’s opposition will offer banks and businesses a “new deal” to gradually reduce special taxes to an average European level in exchange for investments to boost the economy if they win 2014 elections, the leaders of the leftist alliance said on Wednesday.

The alliance of the Socialists and former Prime Minister Gordon Bajnai’s new Egyutt (Together) 2014 party trails Prime Minister Viktor Orban’s ruling conservative Fidesz party in opinion polls, which show voters have been slow to warm to the alliance, announced earlier this month.

“This election will be a referendum on Mr. Orban,” Socialist leader Attila Mesterhazy told a Reuters Investment Summit in a joint interview with Bajnai.

“Not just about the government, and the measures, or Fidesz. No. Do people want to leave the power in the hands of Orban? That’s the main question.”

He said polls, which suggest the two parties together have barely half of Fidesz’ support, are misleading. He said the leftists believed up to a quarter of Hungary’s 8 million voters could still be swayed.

Orban and the leader of the Fidesz parliamentary group, Antal Rogan, declined Reuters requests for interviews.

Orban’s conservative party, Fidesz, has a strong lead in opinion polls ahead of the vote, due in April or May. But close to half of Hungarian voters are undecided and the economy is growing only at a slow pace after a recession last year.

The leftist leaders said the structure of their alliance would remain. This means they will field joint candidates in local races and maintain competing party lists which will determine which of the two men will lead a coalition government if they win the elections.

According to a survey on Wednesday by pollster Median, only 23 percent of voters who wanted a change in government thought this was the best possible alliance.

Some 41 percent supported the alliance but would have preferred a joint bid and one candidate for prime minister. Some 22 percent did not support the alliance, the poll, published in weekly HVG, showed.

Former Hungarian prime minister and Chairman of Egyutt 2014 (Together 2014) Gordon Bajnai gestures next to Attila Mesterhazy (R), chairman of the Hungarian Socialist Party, during an interview with Reuters in Budapest September 25, 2013. REUTERS/Laszlo Balogh

Mesterhazy’s Socialist Party evolved from the communists who ruled Hungary from 1956 to 1989 and has stronger support in opinion polls than Egyutt 2014. Bajnai led a Socialist government from 2009 to 2010 that cut spending to put the economy on a sustainable path.

NEW DEAL FOR BUSINESS

The two opposition leaders said the new deal they would offer international businesses and banks would gradually reduce the extra taxes that the Orban government piled on since 2010 in exchange for new investment that would bring growth to Hungary.

Slideshow (3 Images)

The taxes, including one of Europe’s highest financial sector levies and taxes on the energy and telecommunications sectors, must be reduced gradually to generate growth without endangering a low budget deficit, Bajnai said.

“The right deal is ... to say: look if you are ready to generate additional growth with significant additional investment, capital expenditure, then you can offset part of your extra special tax against those additional investments.”

Orban, who says he saved the country from a Greek-style collapse after years of economic mismanagement by Socialist governments, argues that banks and selected business sectors must take part in the burden of cutting the budget deficit.

Under Socialist governments prior to 2010, Hungary’s public debt rose sharply.

(For other news from Reuters Russian and Eastern Europe Investment Summit, click here)

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(This story corrects the first paragraph to say special taxes could be reduced, not phased out entirely)

Editing by Jane Merriman

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