Hungarian economy minister: Growth, disciplined fiscal policy to balance out higher spending in 2018

Budapest, April 26 (MTI) – Higher economic growth, disciplined fiscal policy and a crackdown on tax evasion will balance out tax cuts and pay rises for public sector workers in the 2018 budget, Economy Minister Mihály Varga said in an interview published on Wednesday.

“I can note surplus revenue from economic development as well as the material advantage resulting from disciplined fiscal policy, but the crackdown on the shadow economy is also important,” Varga told daily Magyar Idők, commenting on the budget revenue necessary to cover planned tax cuts and public sector pay rises next year.

“Mandating the connection of tills to the tax office and the electronic oversight system for road haulage companies has generated an annual 200-300 billion forints (EUR 640-960m) so far. Next year, a new element will be added to the war chest: from July 1, 2018 an online invoicing system could be introduced requiring that companies send their most important business data to the tax office. With this measure, the tax office will be able to see practically the entire turnover of all economic players.”

Varga noted that the 2018 budget would contain a two percentage point cut in the payroll tax, a one percentage point reduction in the tax on small businesses, a decrease in the VAT rate on internet service and fish, expanded tax preferences for families with children, higher public sector wages and 400 billion for roads and developments in big cities.

The public sector wage rises will cost about 200 billion, the expanded tax preferences for families with two children some 20 billion and the lower tax for small businesses around 10 billion forints, he added.

“When drafting next year’s budget, we stuck to the principle of ensuring that no sector and no policy area should get less funding than in the previous year,” Varga said.

The government does not expect any big one-off revenue items in the 2018 budget, he added.

Photo: MTI

Source: MTI/Magyar Idők