The National Assembly began the general debate of the draft bill of the 2017 Budget on Wednesday.
The budget is characterized by predictability and safety, and it is a budget of tax cuts and housing programmes, Minister for National Economy Mihály Varga said. The Minister underlined that one of the main objectives of next year’s budget was to ensure the zero-deficit operation of the state. The document is based on estimates of 3.1 percent GDP growth, 0.9 percent inflation rate and 2.4 percent ESA deficit target, he stated.
The government debt-to-GDP ratio – according to the regulations of the Stability Act – is set to fall to 71.9 percent, 1.6 percentage points below the figure of 2016. As he added, the current debate with the Eurostat concerning the funding of certain financial institutions has not hitherto affected the drafting of the budget.
As the Minister pointed out, the draft bill was prepared with a conservative approach, and it includes two central reserves: the Country Protection Fund of HUF 60bn and the Extraordinary Government Measures Fund of HUF 110bn. Fiscal chapters also have stability allocations of altogether HUF 35bn, which may only be disbursed if actual data match expectations until October.
VAT on some basic food to be reduced
As of 1 January 2017, the rate of VAT on fresh milk, poultry and eggs will be 5 percent. The rate of VAT on restaurant services and Internet is also set to fall to 18 percent, he said, adding that he hoped the lowering of the VAT rate may continue even beyond 2017.
The Minister stressed that the Government “introduced the largest housing programme in decades”, for which HUF 211bn has been allocated. This programme includes family housing allowances, related loans with preferential interest rates, the reduction of VAT on the sale of new residential property and the establishment of national building societies.
Even more money is left at families next year
The family taxation scheme, which recognizes work and the raising of children, will remain in place, he said. Family tax allowance for families with two children is set to increase to HUF 15 000 per month and child, which will add HUF 15bn to the income of 390 thousand taxpayers. Next year’s budget will provide more funding for each field: compared to this year, expenditures are to increase by HUF 270 for education, HUF 167bn for healthcare, HUF 155bn for the social and welfare sectors, HUF 66bn for culture and HUF 22bn for sports and recreation.
As one of the priorities of employment policy Mihály Varga has identified the aim to assist jobseekers in the transition from public work schemes to the private sector. The career model for armed and law enforcement employees will also continue: wages in this sector are set to rise by another 5 percent in 2017, for which HUF 139.3bn has been earmarked. The career model of public servants employed at township offices and county government offices will also be continued, for which HUF 42.2bn is allocated. For the staff at the National Tax and Customs Administration a three-step career model will be introduced, with funding of HUF 27.5, he said. Wage negotiations are currently under way with representatives of the healthcare, social services and cultural sectors, which means that it is too early to specify concrete figures, but required funding is earmarked in the budget, he emphasised.
Bureaucracy continues to be dismantled
The Minister said that half of the funding available in the 2014-2020 programming period will be offered for tender in 2016, and the remainder in 2017. Besides the HUF 2240bn of EU funds, the Government plans to add HUF 1600bn to support development projects.
The cutting of red tape means, he added, that the service provider attitude of public administration will be bolstered and the efficiency of institutions increased, and this is expected to lead to simpler administrative processes, shorter deadlines and lower administrative costs. Downsizing of the apparatus will reduce expenses by HUF 32bn.
Revenues to and expenditures from the Pension Fund and the Health Insurance Fund are expected to be balanced. The value of pension benefits will be preserved, as pensions are to rise by 0.9 percent in 2017. Besides this increase, the reduction of VAT on some basic food will also financially assist pensioners, he stressed.
(Ministry for National Economy)
