Budapest (MTI) – Hungarian opposition parties on Saturday accused the government of tailoring its housing policies to suit the business interests of companies close to the ruling Fidesz party.
Parliament decided on Tuesday to reduce VAT on newly built residential property from 27 percent to 5 percent effective 2016-2019.
The Socialist Party insisted profits from the construction sector generated by the reduction of the VAT on new-build homes will go to companies close to the government.
The government decided to introduce measures to boost the construction sector only after it had gained significant influence in the industry, Zoltan Lukacs, the party’s deputy parliamentary group leader, told MTI. The government can “only do something good” if it also gains from it, he said, arguing that the move to boost the construction sector was designed to generate profits for construction companies such as Magyar Epito owned by Lorinc Meszaros, the mayor of Felcsut, Prime Minister Viktor Orban’s hometown.
The leftist opposition Democratic Coalition said the VAT reduction would favour “Fidesz-friendly oligarchs”.
Party spokesman Zsolt Greczy said the poor in Hungary “will soon hardly be able to afford bread”, let alone build a 300sqm or a 150sqm home. Greczy said the VAT reduction law is filled with loopholes that will allow construction companies to make millions of forints worth of profits off of a measure that was “supposed to” support families. There are already a number of “Fidesz-friendly oligarchs” doing business in the construction sector, he said, citing construction company PBE Epito, in which the prime minister’s son-in-law has a vested interest.
The Dialogue for Hungary party said the government should also support the community housing sector, arguing that many people would not benefit from the VAT reduction.
Rebeka Szabo, deputy mayor of Budapest’s 14th district, said the government should provide housing benefit to families and young people freshly entering the labour market who cannot afford today’s high rents. She also recommended setting up a housing agency tasked with leasing unoccupied apartments by having the government and local government provide benefits for the tenants. Szabo urged the renovation of unoccupied local government-owned apartments, which she said would require calling tenders for the EU-backed energy renovation of buildings, which was earlier cancelled by the government. Szabo said the council of the 14th district this week passed a community housing project aimed at helping those who would not benefit from government support.
In reaction, the Fidesz party said that the left is once again refusing to stand by Hungarian families just as they did in the case of the scheme to reduce household utility bills. The party said in a statement that the VAT law aims to ease market conditions with a view to broadening opportunities for families to buy homes.
Bence Tuzson, state secretary for government communications, said in reaction that former prime minister Ferenc Gyurcsany and the Socialist Party doubled VAT on home construction during their time in office. In a statement, the state secretary said that Gyurcsany had raised VAT from 12 percent to 25 percent in three stages. Neither Gyurcsany nor the Socialist Party supported the government’s cuts to household utility bills or VAT reductions, he added