According to Finance Minister Mihály Varga, the Hungarian gross domestic product will increase by 4.3 to 4.5 per cent this year, and based on the government’s expectations, the economy in Hungary will expand at a rate above 4 per cent next year as well.

At the meeting of Parliament’s Enterprise Development Committee, the Finance Minister said the government continues to regard the promotion of enterprises as an important priority, and based on the six-year agreement concluded at the end of 2016, the reduction of the tax burdens of businesses will continue to remain one of the most important elements of this effort. As a result, by the end of 2022, the taxation level of small and medium-sized enterprises will fall below the average of the Visegrád countries, Mr Varga stressed.

The Finance Minister indicated that, as a result of the six-year wage agreement concluded in 2016, from January this year the minimum wage and the wage minimum for qualified workers had further increased, by 8 and 12 per cent respectively. He highlighted that despite earlier critical comments regarding the six-year agreement, the rise in wages has not resulted in mass bankruptcies among businesses. In actual fact, the unemployment rate has further decreased to 3.8 per cent, and at the same time there are 80,000 job vacancies in Hungary, he said.

Thanks to the increasing level of real wages, according to the data of the Central Statistical Office, ever more young people are coming home from abroad and are seeking employment in Hungary again, the Minister pointed out.

According to Mr Varga, the tax philosophy pursued by the government in the past few years has proved to be a success: namely that the government has reduced taxes on work and incomes, and has diverted the Hungarian tax system towards taxes levied on consumption. Mr Varga said, in the area of taxation – with a view to further lessening the burdens of businesses – the government is preparing for further simplifications and reductions also during the coming period.

The Finance Minister pointed out that the cabinet had introduced the small business tax (kiva) and simplified taxation for small businesses (kata). The upper limit of kata is 12 million forints, and some 300,000 taxpayers have adopted for this arrangement so far, while 29,000 taxpayers have opted for kiva.

The Finance Minister also highlighted that, thanks to the changes in the regime of taxation, the corporation tax paid by businesses has been reduced to 9 per cent on a standard basis in the past few years which is the lowest rate in the European Union.

In answer to questions from Members of Parliament, he said the government is unable to support a ban on a six-day working week because that would reduce the annual GDP by as much as HUF 70 billion.

The Finance Minister said in response to a question concerning housing savings funds that the state subsidisation of housing savings funds was unjustifiably high in Hungary: it reached 30 per cent, while in Germany the level of state contributions stands at 4 per cent, and at around 1.5 per cent in Austria. He highlighted that it makes one wonder that there are some 500,000 housing savings contracts which were concluded by multiple family members within the same family. He said: “no one said that any fraud was committed in connection with the last-concluded 140,000 contracts”.

Mr Varga pointed out that, in actual fact, the state subsidies provided for housing savings funds were terminated too late as the 140,000 contracts concluded in the last few days stand as proof of this.

(MTI)