* Government delayed plan to halve bank tax next year
* To double new tax on financial transactions
* Announcement could hit chance of foreign loan deal
BUDAPEST, Nov 13 The head of Hungary's Bankers'
Association resigned over new taxes imposed on the financial
sector, throwing a spotlight on a dispute with the government
that could hit the country's hopes of securing foreign aid.
Mihaly Patai's departure, announced by the association on
Tuesday, is the latest chapter in the long-running conflict
between banks and Prime Minister Viktor Orban, who has used
unorthodox tax measures to stabilise the budget in central
Europe's most indebted nation.
Orban's government last month reneged on a pledge to halve
Europe's highest levy on the banking sector next year and then
doubled a new tax on financial transactions as Hungary struggles
to keep its deficit within European Union limits.
Patai, who also leads UniCredit's Hungarian
business, announced he was quitting a day after parliament
approved the proposed tax changes, some of which the European
Commission criticised as "distortionary" and harming growth.
"As approval of the government proposals took place last
night, the chairman has officially notified (the body) of his
resignation," the association said in a statement.
Orban's proposals, unveiled last month, prompted banks to
issue a statement expressing "shock" over what they called the
government's unilateral breach of an earlier agreement.
Some of the measures, which also include new taxes on public
utilities, went against International Monetary Fund advice,
dimming prospects for an agreement on an international financial
safety net for Hungary after a year of on-off negotiations.
The banks said the measures could undermine funding of the
economy, which is mired in its second recession in four years.
That echoed an assessment by the National Bank of Hungary.
The association's deputy chairman Daniel Gyuris would serve
as interim head until a permanent replacement for Patai is
found, the group said.