Hungary is gaining strength. More and more people are making a living from work instead of living off benefits, taxes are falling and wage increase programmes are continuing. Thanks to these factors, every Hungarian family can take one step forward. The Government’s goal is for the strengthening of the country to be felt by everyone in their own lives. Below, we summarize the most important Government measures and achievements.
1. Family tax benefits are increasing
The Government’s goal is for Hungary to be a family-friendly country. This is why it decided to introduce a family tax system that is unique in Europe. This measure has lived up to expectations: the family tax system is already providing assistance to over a million families each month.
The family tax benefit for families with two children will be increasing to 15 thousand forints per child from January 2017. This means they will be able to validate 30 thousand forints in benefits every month. Families with one child will continue to receive 10 thousand forints/month in tax benefits, while families with three or more children are eligible for monthly tax benefits of 100 thousand forints.
Thanks to the family tax system, the number of marriages has increased by 30 per cent since 2010, while the fertility rate has gone up by 15 per cent. Providing increased support for families is one of the main pillars of the Hungarian economic model. The Hungarian Government would like to solve its demographic issues by strengthening families, not through migration.
2. Increased salaries for doctors, nurses and teachers
The Hungarian economy now stands on firm foundations. This makes it possible for wage increase programmes to be launched in several sectors. This is why the Government decided on the introduction of the teachers’ career model and to increase salaries within the healthcare sector.
The teachers’ career model was launched in 2013 and has enabled an average increase in teachers’ salaries of 50 per cent between 2013 and 2017. Salary increases will continue in higher education, with lecturers and researchers receiving a total increase of 27 per cent by 2018. While left-wing governments took away a month’s salary from teachers, the civil government is offering them a dependable career.
This autumn, the Government decided on raising the salaries of medical consultants and specialist pharmacologists. Their salaries will increase in two phases by 207 thousand forints. Nurses will also be receiving an increase; their salaries will be increasing by an average of 65 thousand forints by 2019, while resident doctors will also be receiving an additional 50 thousand forints from next November.
3. The economy is growing
The performance of the Hungarian economy has now also been recognised by the world’s largest credit rating agencies. The GDP is seeing stable growth and government debt is also continuously decreasing, while the budget deficit remains constantly under 3 percent. The fact that Hungary is gaining strength is also indicated by the fact that the unemployment rate has fallen to under 5 per cent; there are 711 thousand more people working than in 2010.
The stable economy provides a good foundation for reducing taxes and increasing wages. While the rate of personal income tax will remain at 15 per cent (the rate was 38 percent prior to 2010), in 2017 employer tax contributions will be reduced by 5 percentage points and the rate of corporate tax will fall to 9 per cent. This means that we will have the lowest rate of corporation tax in Europe.
With the money saved thanks to these tax reductions, Hungarian enterprises will be able to pay higher wages and salaries. Thanks to the agreement concluded between employers and workers organisations and the Government, the minimum wage will increase by 15 per cent in 2017, while the minimum wage for skilled workers will increase by 25 per cent. This means that not only are there more workplaces, but working is also more worthwhile.
Other areas will also benefit from tax reductions. VAT on the most important food products (milk, eggs, poultry) will fall to 5 per cent from January 2017, while VAT on internet services will be reduced to 18 per cent. If needed, the Government will also protect this lower rate of internet VAT against criticism from Brussels.
The Government would primarily like to facilitate an increase in wages and salaries through reducing taxes. The success of these joint efforts is indicated by the fact that real wages increased by more than 7 per cent in 2016.
4. Free meals for over 318 thousand children
One of the Government’s goals is to reduce the burdens on families with children. Accordingly, more children than ever before are receiving free school meals and free textbooks. When the Government took office a budget of 32 billion forints (EUR 102 million) was available for school catering. This sum has now increased to 74 billion forints (EUR 236 million), the highest level since the fall of communism. This means that 318 thousand children now receive three free meals-a-day, compared to the previous number of 92 thousand. 90 per cent of young children in Hungary now receive free school meals.
The Government is also paying particular attention to providing meals to children during school holidays. In 2017 we are more than doubling the sum spent on also providing free meals to disadvantaged and severely disadvantaged children during school holidays from 3 billion to 6.7 billion forints.
In the current school year, a total of 730 thousand students received a free textbook package, including all lower school students and socially disadvantaged upper school students, 37 thousand more than in the previous year. In the upcoming school year, fifth-graders will also receive their textbooks free of charge. The fact that the average price of school textbooks has been reduced by an average of 40 per cent during the past six years also represents significant savings for parents.
5. Skilled Workers to receive 25% pay rise
In recent years our goal was to enable everyone to find work. We had to leave behind us a period in which it made more sense to live off benefits than to work. There are now 711 thousand more people in employment compared to 2010. This means that Hungary is now enjoying the highest employment rate in 26 years.
Enabling everyone to find work is not our only goal; our other target is that it should be worthwhile for everyone to work. This requires pay rises. However, the opportunity to increase wages and salaries is not just a question of good intentions, it also needs lower taxes. This is why the agreement concluded between representatives of employers’ and workers’ organisations and the Government at the end of 2016 is so important. The biggest winners of the agreement are skilled workers.
According to the agreement, the minimum wage will increase by 15 percent from January 2017. This means that the monthly minimum wage will increase to HUF 127,500, compared to HUF 73,000 in 2010. The minimum wage for skilled workers will increase by 25 percent to 161 thousand forints.
Wage increases will also continue in 2018, with the minimum wage rising by a further 8 per cent and the minimum wage for skilled workers increasing by a further 12 per cent. In total, this means that the minimum wage for skilled workers will have more than doubled since 2010. These measures are about giving work a higher standing.
6. 10 million forints for new homes
The Government’s goal is to enable every Hungarian family to own their own home. This is why the home creation programme was launched. Within the framework of the programme, Hungarian families may receive up to 10 million forints in none-refundable state funding towards purchasing their own house or apartment (the CSOK programme). Families with three children or who undertake to have three children are also eligible to receive a low-interest, preferential state loan of up to 10 million forints. Home creation is also being facilitated by the fact that VAT on new home construction is being reduced to 5 percent, in addition to which the introduction of so-called national home creation communities should also facilitate the construction of new homes.
The home creation programme provides tangible assistance to families, as also indicated by the fact that more than 32 thousand families have requested a total of 70 billion forints in home creation funding since the programme was launched in 2015. The era of forex loans can finally be put to an end. The home creation programme has a stable financial background in view of the fact that 211 billion forints (EUR 671 million) have already been set aside for this purpose in the 2017 budget.
The Government is also examining how to provide these benefits to even more people. Accordingly, the Cabinet is currently examining how CSOK funding could be accepted as an initial payment with relation to bank loans. Plans also include enabling the price of a newly purchased apartment to be tax-deductible.
More new houses and apartments will be built in Hungary thanks to the home creation programme (the number of issued building permits has increased by 250 percent). This also facilitates economic growth. Not least, the programme also contributes to the birth of more children in Hungary. Owning a home is one of the important prerequisites of a civil life, and accordingly the Government views home creation as a national issue.
7. Reduced VAT on internet services
The Government launched a national consultation on the internet, a unique initiative in Europe. The discussion took place exclusively on online platforms. Tens of thousands of people participated in the consultation and the majority agreed that taxes relating to internet use should be reduced. Accordingly, the Government has decided to reduce the level of VAT on internet services from 27 percent to 18 percent from 2017. This means that 2017 will see the lowest ever level of VAT on internet services.
Thanks to the tax cut, the cost of fixed and mobile internet access will be reduced. Users could save up to a whole month’s costs. The Government is maintaining its decision to decrease the VAT on internet services despite criticism from Brussels.
One of the Government’s priority goals is for every family in Hungary to have access to super-fast broadband internet services by the end of 2018.
8. Thousands of new workplaces
One of the Government’s goals is to enable everyone to make a living from work instead of living off benefits. According to this standpoint, the key to the further strengthening of the country is for everyone who wants to and is able to work to have a job.
Hungary now has the highest employment rate since the regime change in 1989. The number of people in employment exceeds 4.4 million. 711 thousand more people are working than in 2010, in addition to which the vast majority of new jobs are market posts.
When the Government took office, Hungary was only ranked 19 among the Member States of the European Union with regard to unemployment. The success achieved so far is clearly indicated by the fact that the unemployment rate fell to 4.7 percent by October 2016.
These results were also contributed to tax decreases and the Job Protection Action Plan. The Government has also reorganised the vocational training system to enable easier and more successful employment. In addition, significant funding is also available within the Public Work Programme, which provides assistance to people who are temporarily unable to find a suitable job.
Today, we can set as our goal not only to provide work, but to enable everyone to find quality work with a high added value that pays an increasingly good wage. This goal is also served, amongst others, by continuously expanding wage increase programmes within the public sector. Within the framework of these programmes, teachers, doctors, nurses, nursery school professionals with degrees in higher education, lecturers and researchers in higher education, law enforcement employees and people employed in government public service offices and the cultural sector will all be receiving higher salaries. We would not only like to enable everyone to have employment, but also to make sure that it is worthwhile for everyone to work.
(kormany.hu)
