Government: 2016 budget designed to boost economy, help families

Budapest, May 30 (MTI) – The government seeks to promote job creation and boost the economy, as well as provide assistance to families, a state secretary of the economy ministry said in his introduction to the parliamentary debate on next year’s budget on Saturday.

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Bela Glattfelder said the bill would introduce changes to 18 laws, including rules governing efforts to reduce Hungary’s state debt. The current growth and inflation path require a change to the rate at which the public debt is reduced. If the bill is passed into law, the public debt will need to be reduced in the region of 0.1 percentage point each year as long as Hungary’s growth is below 3 percent and inflation is lower than the central bank’s target of 3 percent, he added. In the opposite scenario of higher growth and inflation, the current debt-reduction rules will apply, he added.

The government recently submitted a bill to on amending a rule on the nominal state debt threshold after the Fiscal Council noted that the government’s original 2016 budget draft failed to comply with a rule on limiting the nominal increase in state debt to half of the difference between projected inflation and real GDP growth. Observance of the rule would have required a correction in the budget of 700 billion forints, it added.

Another proposed change is to postpone the introduction of the flat corporate tax from the originally suggested date of January 1, 2016. Glattfelder said that the delay would not harm companies or make the tax system less predictable.

The date for introducing a flat-rate corporate tax would be deferred from January 1, 2016 to the start of 2020. “The later introduction of the flat-rate corporate tax causes no significant disadvantage to economic players,” according to the bill.

At present, Hungarian companies pay a 10 percent rate on a tax base up to 500 million forints and a 19 percent rate thereafter.

Under the new tax laws, major “strategic” public finance data will be classified for two years, Glattfelder said, insisting that access to the entire range of information could “compromise optimally low-cost financing and result in market influencing, as well as harming the state’s financial interests”.

Gabor Orban, another economy ministry state secretary, said the proposed personal income cuts would leave a total 110-120 billion forints (EUR 358-390m) with families next year.

In 2016, couples without children will pay 56,000 forints less tax, while parents of two children, earning the minimum wage, will save 85,000 forints for the whole year. The same family with average wages will save over 108,000 forints, the state secretary added.

As of January 1 next year, VAT on pork cuts will be lowered to 5 percent with a view to helping needy families, Orban said.

Similarly, “assisted funerals” will not be introduced before January 1, 2017, allowing municipalities, churches, and other cemetery managers to prepare for providing funerals free of charge to the poorest families.

Source: http://mtva.hu/hu/hungary-matters