Budapest, June 21 (MTI) – Hungary’s cash-flow-based budget deficit, excluding local councils, was 13.2 billion forints (EUR 42.1m) at the end of May, the economy ministry confirmed in a second reading of data on Tuesday.
The deficit reached 1.7 percent of the 761.6 billion forint full-year target.
In May alone, the general government ran a 131.7 billion forint surplus.
The ministry noted that the January-May deficit was almost 500 billion forints lower than the gap in the same period a year earlier because of higher co-payments on European Union-supported projects at the end of the 2007-2013 funding cycle, and lower co-payments at the start of the new funding cycle, as well as higher revenue from corporate tax, VAT, personal income tax and social contributions.
The ministry attributed higher budget revenue to the “favourable economic environment” and “dynamically expanding employment” as well as a crackdown on tax evasion that has improved taxpayer morale. It also acknowledged the impact of the growth tax credit on higher corporate tax revenue.
The tax credit allows companies with fast-growing earnings to defer corporate tax payments on profit increases over a period of two years.
The 2 percent of GDP full-year deficit target, calculated according to EU accounting rules, “remains realistic and achievable”, the ministry said.
Detailing the data, the ministry noted that revenue from corporate tax reached 285.4 billion forints in January-May, up from 138.5 billion forints in the same period a year earlier, and attributed the big difference to the growth tax credit.
Hungarian lawmakers approved amendments to the 2016 budget act a week earlier that raise targeted revenue from corporate tax by 289.4 billion forints to 689.9 billion forints. The MPs raised both revenue and expenditures of the budget by 421.7 billion forints, leaving the deficit target unchanged.