The 2017 Budget enables every Hungarian to make one step further, Minister for National Economy Mihály Varga said on Tuesday, before he handed over the 2017 Budget Bill to the Deputy President of Hungary’s National Assembly.
Hungary on a firm footing
Mihály Varga stressed that Hungary has been placed on a firm footing; next year’s budget projects economic growth of 3.1 percent and a budget deficit of 2.4 percent of GDP. As he added, the government debt-to-GDP ratio is expected to fall further.
Every area to receive more funding
In comparison to this year’s budget, the Government will provide a higher volume of fiscal resources for each field: expenditures are set to increase by HUF 270bn on education, HUF 167bn on healthcare, HUF 155bn on social security and welfare, HUF 66bn on culture, HUF 114bn on law enforcement, HUF 5bn on local governments, HUF 26 on the judicial system, HUF 10 on foreign affairs and HUF 5bn on defence, he pointed out.
VAT on some basic food to be lowered
As of 1 January 2017, VAT on milk, eggs and poultry are to be reduced to 5 percent which is a huge help for families, the Minister said. In addition, this measure will improve the competitiveness of domestic producers and boost retail sales. Besides VAT on basic food, that of restaurant services is also set to fall to 18 percent, and so does VAT on Internet.
In 2017, the personal income tax rate remains 15 percent, one of the lowest rates in Hungary, he added.
Next year’s budget will be comprised of three parts: the first is for the state’s operating revenues and expenditures, which is expected to post zero deficit, while the second and third will contain EU-funded and locally-funded development projects which may post some ESA deficits.
Government to preserve the real value of pensions
The hike of pension benefits is in line with the inflation rate. In case consumer prices grow less than the Government prognosticates, pensions is real terms will increase, while in case inflation turns out to be higher than anticipated, pensioners will be compensated, they must not suffer any loss, he emphasised.
In 2011-2015, pensions rose by 21.5 percent, 8.8 percent above inflation, and this growth “has fully made up for the loss in pensions caused by former governments,” he said.
Lowering VAT on basic food, he added, is a form of pension hike, as these products constitute a large share of goods in pensioners’ shopping basket.
Extension of family tax incentives
Thanks to family tax allowances, the average income of families with two children is set to grow next year. The monthly amount of tax allowance for these families will gradually increase two-fold by 2019, from HUF 10 000 to HUF 20 000. At first, this amount will rise, in 2017, to HUF 15 000, he said.
The Government has also announced the largest housing programme of all time: under the scheme, HUF 211bn are to be allocated for the support of housing-related projects and measures for families. This amount covers expected costs of the Family Housing Allowance (CSOK), state-subsidized loans and lower VAT related to the building of new homes.
(Ministry for National Economy)
