The tax system is the totality of all types of taxes that are in force in the society in a certain period. Accordingly, the tax system of every country includes all tax forms existing in that country. Taking this into account, in this section we will therefore only mention the main elements of the tax systems of the two countries.
1. Tax system of the Republic of Hungary a) Central taxes:
- corporate income tax,3 - simplified business tax, 4 - value added tax,5 - excise tax,6
3
Act LXXXI of 1996 on Corporate Tax and Dividend Tax 4
Act XLIII of 2002 on Simplified Entrepreneurial Taxation 5
Act CXXVII of 2007 on Value Added Tax. See also Z. Ercsey, ‘Általános forgalmi adó’ [Value Added Tax] in Lilliné Fecz Ildikó, ed., Költségvetési szervek gazdálkodása [Financial Management of Budgetary Agencies] (Budapest, Verlag Dashöfer Kft. 2010)
6
Act CXXVII of 2003 on Excise Taxes and Special Regulations on the Distribution of Excise Goods
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- registration tax on vehicles,7 - personal income tax,8 - duties. b) Local taxes:9 - wealth taxes: o building tax, o property tax, - community taxes:
o personal community tax, o corporate community tax, o tourism tax,
- local business tax.
c) Shared taxes in the Republic of Hungary:10
- personal income tax, - tax on motor vehicles, - duties,
- other shared types of revenue (e.g. fines).
2. Tax system of the Republic of Croatia a) Central taxes:
- value added tax,11 - profit Tax,12 - excise duty/tax on:13
o personal motor vehicles, other motor vehicles, vessels and airplanes, o petroleum products,
7 Act CX of 2003 on Motor Vehicle Registration Duty 8
Act CXVII of 1995 on Personal Income Tax 9
The international figures show the dominance of central taxes. The wealth taxes are used among local taxes in the Anglo-Saxon countries. The surtax on income tax is the dominant in the Nordic countries, and local business tax is used as the highest proportion of local taxes by the third group of countries.
10
The taxation rights are delegated to the central state regarding the shared and assigned taxes. Accordingly, the revenue deriving from shared and sssigned taxes is allocated to the self-government units by sharing of certain central taxes (tax- sharing). It is the decision of the state, which type of tax in what proportion and based on what principles shall be allocated to the self-government units. The general trend is that the specific proportion of personal income tax increases the budgetary revenue of the self-governments (besides the two scrutinized country, see for instance Austria and Germany).
11
Law on VAT, Official Gazette 47/95, 106/96, 164/98, 105/99, 54/00, 73/00, 48/04, 82/04, 90/05, 76/07, 94/09
12
Profit Tax Act, Official Gazette, 177/04, 90/05, 57/06 13
Zsombor Ercsey – Emina Konjić– Renata Perić– Csaba Szilovics _________________________________________________________________________________________________________________________ 158 o alcohol, o beer, o non-alcoholic beverages, o tobacco and tobacco products, o coffee,
o luxury products,
o insurance premiums from automobile liability and motor vehicle insurance premiums.
b) County taxes:14
- inheritance tax, - tax on motor vehicles, - tax on boats,
- tax on gaming machines.
c) Municipal and town taxes:15
- surtax to income tax, - tax on consumption, - tax on holiday homes, - tax on corporate title, - tax on public land use.
d) Shared taxes:16
- income tax,17
- tax on sales of real estate.18
3. Concluding remarks
It can be clearly seen from the above review that besides a number of similarities – such as the regulation of value added tax and excise duty – there is a significant difference deriving basically from the different structure of public finances. The legal system of the Republic of Croatia separates clearly the local and county (regional) self-government units also from the point of view of tax law, whereas the effective Hungarian provisions specify these uniformly as the local fiscal level, and the two levels of state revenue, despite smaller failures, function in harmony. For instance, Act C of 1990 on Local Taxes, as a central legal framework, entitles the local self-government units to legislate and to
14
Law on Financing of Local and Regional Self-Government Units, Official Gazette 117/93, 33/00, 73/00, 59/01, 107/01, 117/01-correction 150/02, 147/03, 132/06, 73/08
15 Ibid. 16
Shared taxes are those whose revenue is divided between two or more fiscal levels.
17
Income Tax Law, Official Gazette, 177/04, 73/08, 80/10 18
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form the local tax system, but the the calculation of applicable taxes operating since 1998 could also be mentioned, according to which the volume of local taxes levied by local self-government units shall be taken into account as well regarding the state subsidies. In respect of the duties, as shared (assigned) taxes, it shall be pointed out that according to the Hungarian tax system, duties19 form a group separate from taxes, and are part of revenues of the central budget – which is partly assigned to the local self-government –, whereas these duties are specified and levied by the counties as per the Croatian regulation. The VAT, excise duty, and profit taxes are central taxes in both countries as indicated above. It is intriguing that the excise duty in the Republic of Croatia is related to the types of taxes similar to VAT (for instance, tax on luxury products, tax on non-alcoholic beverages), whereas in Hungary it shall be paid only regarding excise products20 (so fuel products, alcoholic beverages, and tobacco products). It is a further similarity that the tax on certain buildings (although expressively it is in force only in relation to holiday homes in Croatia), and the tax on public land use (although that is not considered as a type of local taxes in Hungary, but the local government regulates it in a decree) belong to self-governmental (local) taxation and revenue. It is only a formal difference from the point of view of revenue allocation, but from the point of self-determination and the point of self-government financial management, it is a significant difference that the tax on motor vehicles is a central type of tax in the Republic of Hungary, which is assigned by the fiscal level of the central governmental budget to the local self-governments, whereas the determination thereof belongs exclusively to the jurisdiction of the county in Croatia.
III. Powers and responsibilities of local and regional self-