Budapest, June 23 (MTI) – Lawmakers approved Hungary’s budget for 2016 at an extraordinary session on Tuesday.
The budget was passed six months earlier than usual with 119 votes in favour and 63 against.
The Budget Act calculated with a budget deficit of 2 percent of gross domestic product (GDP) based on EU accounting rules and public debt of 73.3 percent of GDP.
The budget targets total revenue of 15,800 billion forints (EUR 50.7bn), total expenditures of 16,561 billion forints and a deficit of 761 billion forints.
The legal deadline for submitting budget bills is October 15 of the preceding year, except for election years, but the government said earlier it aimed to see next year’s budget approved before the end of Parliament’s spring session.
Mihaly Varga, the economy minister, told a press conference after the vote that next year’s budget “equals to lower taxes and safe jobs for families”. He said parliament, through passing the budget, had expressed its support for the government’s policies of cutting taxes, creating jobs, raising wages and supporting investment.
Varga confirmed the government’s expectations of a 2.5 percent economic growth and 1.6 percent inflation, as well as reducing the national debt below 74 percent before the end of next year.
Next year, more money will be spent on health, education, public safety, and rural development, he said.
The minister said that the government’s job protection scheme would be rolled out to agriculture, and employers would benefit from tax reductions totalling 138 billion forints in 2016 under that scheme. He added that next year 240,000 people, 40,000 more than this year, would be offered fostered jobs. Those public works programmes will cost a total of 340 billion forints next year, up from 270 billion in 2015, he said.
Varga said that teachers would be granted another 10 percent payrise in September next year, while law-enforcement career models – involving a 30 percent pay rise – will be introduced before the end of this year. He added that a total of 15.3 billion forints will be spent on raising the incomes of young doctors.
The green opposition LMP criticised the budget for what it saw as “meagre tax cuts”. Lawmaker for the party Erzsebet Schmuck said that the tax cuts would amount to just 0.5 percent of GDP, and based on this it can “hardly be called a budget of tax reduction”.
Speaking after the vote, in which her party did not support the budget, Schmuck called for closing the wage gap for low earners and stressed that 4 million people were living below subsistence levels. Reducing the personal income tax would only increase social differences and poverty further, she insisted.
LMP would reduce the VAT on all basic food products and increase support for families with children, Schmuck added.
According to the leftist Democratic Coalition (DK), the government has “left millions of people in shallow water” through adopting the budget.
DK’s deputy chairman Laszlo Varju said that the new budget was far from cutting taxes or creating jobs “no matter how hard the cabinet insisted”.
Varju argued that next year taxes will continue to weigh heavily on employees, while Hungary’s VAT is “record high” and will “boost the illegal economy”. The budget will not promote job creation, and though the government forges strategic partnerships, new positions are only offered in fostered work schemes, he said. He suggested that those schemes “had the potential of creating modern slavery”.