Daily News | Nov 4, 2018 | 2
Economy Minister says 2016 budget dedicated to tax cuts, opposition parties dissatisfied
Budapest, June 16 (MTI) – Economy Minister Mihaly Varga said the approval of the main 2016 budget figures on Tuesday offer the opportunity that it should be a budget of tax reduction.
He told parliament that thanks to the changes approved, some 230 billion forints will be left in the economy, in the pockets of families, employees and businesses.
The green opposition LMP party said the budget cemented in the government’s social and economic policies, resulting in a growing gap between rich and poor. Lawmaker Erzsebet Schmuck said family income and child support benefits should have been increased, and she criticised the decision not to extend the reduction of VAT to all basic foodstuffs.
Opposition party PM said the government again favours the rich and it is unacceptable that “90 percent of the country is once again worse off” while the top 10 percent enjoy the benefits.
The opposition Egyutt said the flat tax system had failed in Hungary over the past five years. Money left in the pockets of the wealthy has not been reinvested but has simply disappeared, it said.
The opposition Democratic Coalition (DK) party said the budget leaves VAT at “a record high level”, and that it does not contain benefits aimed at job creation. DK said the budget cuts government assistance for the elderly and that it “does not acknowledge the problems of health-care or education”.
Parliament approved on Tuesday a package of earlier announced tax changes for 2016 which includes a reduction of the personal income tax rate to 15 percent next year from 16 percent and a cut to a special levy on banks.
Under an agreement signed between the Hungarian government and the European Bank for Reconstruction and Development (EBRD) on February 9 this year, the top rate of the bank levy will be reduced to 0.31 percent from 0.53 percent on the part of the tax base exceeding 50 billion forints (EUR 160m) in 2016, and to 0.21 percent in 2017 and 2018.
The tax preference for families raising two children will be doubled to 20,000 forints per child a month gradually over four years from 2016.
The VAT rate on unprocessed pork will be reduced to 5 percent from 27 percent.
Lawmakers approved the bill with 133 votes in favour and 39 against.
Parliament also approved an amendment submitted to the 2016 budget bill by the fiscal committee, finalising the main revenue and expenditure figures of the budget. Accordingly, the 2016 budget bill targets total revenues of 15,800 billion forints, total expenditures of 16,561 billion and a deficit of 761 billion. The draft of the budget bill, submitted to parliament on May 13, targeted total revenues of 15,790 billion forints, total spending of 16,551 billion and a deficit of 761 billion.