The opposition Socialists on Saturday urged the government not to raise the VAT rate on new homes to 27 percent, but ensure that it stays at 5 percent for the long term.
Lawmakers lowered the VAT rate on home construction to 5 percent from 27 percent from 2016, but the rate is set to revert to the former level, which is Hungary’s main VAT rate, from the beginning of 2020.
The cabinet’s plan to raise the VAT rate on home construction goes against European Union reform efforts,
MEP Tibor Szanyi told a press conference in Budapest. From 2020, Brussels plans to introduce a fourth VAT rate of 0 to 5 percent applicable to products of social, health or environmental benefit. As a result, governments could apply a 2 percent VAT rate to basic foodstuffs, for example, he added.
He said the Socialists propose applying a VAT rate that is even lower than 5 percent to homes purpose built for low-income renters.
In a statement responding to the remarks,
ruling Fidesz said the Socialists had doubled the VAT rate on homes and cheated voters in 2006.
The Socialists did not support the government’s reduction of the VAT rate on home construction from 27 percent to 5 percent three years earlier, the party added.