Next year’s budget promotes a rise in wages, earnings and investments as well as the reduction of taxes and the sovereign debt all at once, Finance Minister Mihály Varga said on Kossuth Radio’s programme Sunday Paper.

The Minister said the reduction of fiscal revenues in an appropriate and desirable form creates opportunities which both businesses and workers can take advantage of.

As part of the economy protection action plan, further taxes will decrease and new grants will be made available which will extend the credit options of businesses, he added. He mentioned as an example that from 1 July, the social contribution tax has decreased by 2 percentage points, while next year the tax of small businesses will decrease by one percentage point. In the interest of the development of the tourism sector, the government has reduced the VAT on hotel and accommodation services from 18 per cent to 5 per cent, Mr Varga underlined.

The Finance Minister said, similar to Prime Minister Viktor Orbán, he would like a budget which accumulates a surplus, instead of generating a deficit. According to Mr Varga, they are on the right track towards achieving this goal; this is also testified to by the fact that the sovereign debt – which stood at 83 per cent in 2010 – will only amount to 67 per cent next year. Simultaneously, the deficit of the budget will amount to just one per cent of the gross domestic product (GDP), he said.

The Minister further said the extremely high growth rate of 5.3 per cent in the first quarter has convinced the European Commission that the expansion of the Hungarian economy could be above 4 per cent also this year.

Mr Varga pointed out that in next year’s budget several areas will receive substantially more funding than they have done this year. HUF 2,228 billion will be available for family support measures, which include the baby expecting support, the extension of the family housing benefit (‘csok’), the cancellation of the mortgage debts of families with children, the car purchase programme of families, and creche developments.

The Finance Minister also mentioned the personal tax exemption of mothers with four or more children which will provide help worth HUF 20 to 22 billion in total for some 40,000 mothers. The allocation of housing support will be approximately HUF 300 billion next year which is double the amount that was available in 2010.

Mr Varga said it is important that in 2020 there will be more funding for education and health care as well. In total HUF 2,000 billion will be available for health care purposes which is more than HUF 184 billion higher than this year’s allocation, and HUF 770 billion higher than the 2010 level. An allocation of more than HUF 2,000 billion will be available for education which is HUF 60 billion higher than this year’s and HUF 645 billion higher than the 2010 allocation, he said.

(Cabinet Office of the Prime Minister/MTI)