Economy minister: Tax cuts, home-building and growth centrepieces of 2017 budget

Budapest, April 26 (MTI) – Tax cuts, the government’s home-building scheme and growth will be the centrepieces of next year’s budget, Mihály Varga, the economy minister, said in parliament on Tuesday.

Introducing the 2017 budget bill, he said that the budget would ensure that every Hungarian can take steps forward.

The government targets economic growth next year of 3.1 percent together with a budget deficit of 2.4 percent of GDP. The public debt will continue to decline, he added.

The budget contains a combined 170 billion forints (EUR 545m) of reserves in the National Protection Fund and for “extraordinary government measures”. Additionally, ministries will be required to freeze 1 percent of their budgets as “stability” reserves, adding up to 35 billion forints, he said. The reserves may only be freed up after October, if fiscal targets are met, he added.

Every area of the budget will have higher funding compared to this year, Varga said. Extra funds in the education budget will amount to 270 billion forints, health care will receive an added 167 billion forints while social security and welfare spending will have 155 billion forints more. Extra spending on culture will amount to 66 billion forints, he said.

The budget allocates 211 billion forints for home purchases subsidies.

Further, 114 billion extra will be allocated for law enforcement, 5 billion for local councils, 26 billion for judicial matters, 10 billion for foreign affairs and 51 billion for defence.

The real value of pensions will be preserved as increases will be essentially pegged to inflation, the minister said. If retail prices rise at a slower pace than the government’s projection then the real value of pensions will rise. If it is the case, however, that inflation rises at a higher pace than projected then pensioners will be compensated, he added. Varga said that the reduction of VAT on basic foodstuffs also meant a rise in the real value of pensions. VAT on milk, eggs and poultry will fall to 5 percent from Jan 1, he noted. Further, VAT on restaurant and internet services will drop to 18 percent, he added.

Personal income tax will remain at 15 percent, one of the lowest rates in Europe, Varga said.

The state operational budget will be balanced, he said. The other two pillars of the budget contain European Union and domestic development funds, and, based on European accounting rules these parts of the budget will be in deficit.

Parliament is scheduled to vote on the budget on June 13.

Photo: MTI

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