Official: Reduced banking tax to encourage lending

Budapest, December 12 (MTI) – The government expects the lowered banking tax to encourage lending activity and thus promote economic growth, an economy ministry state secretary said on Saturday.

Agnes Hornung noted that the tax’s reduction from 0.53 percent to 0.24 percent, as against the originally planned 0.31 percent, from January 2016 was proposed on the basis of informal signals from the European Commission and an agreement with the European Bank for Reconstruction and Development (EBRD).

She said the proposal came after several rounds of negotiations with the EC so that Hungary could honour its agreement with the EBRD on lowering the banking tax in 2016. Hornung said one of the key points in the agreement was for Hungary to continue lowering the levy until it was reduced to “the European average”.

The state secretary noted that 2009 will be used as the benchmark year for total assets in all cases even in 2016. The tax’s lower bracket would remain the same, 0.15 percent up to 50 billion forints.

The government consulted the Hungarian Banking Association in the course of drafting the bill and the association supports the reduced tax, she said.

Hornung said the changes will not alter the tax wedge on the whole sector and the central budget’s revenue from the tax in 2016 will not change either, with the banking tax still set to contribute 60 billion forints to the 2016 budget’s revenue side. The banking tax generated approximately 130 billion forints in revenue for the state budget this year.

The state secretary stressed that the government is committed to further reducing the bank levy from 2017, in line with the agreement with the EBRD. She said the government would submit the proposal for the next banking tax reduction to parliament next spring, when it submits the budget proposal for 2017.

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