During the epidemic, 50-60 tax changes were made, the goal is to maintain the country’s tax advantage achieved in recent years, said Minister of Finance Mihály Varga at the annual hearing of the Parliamentary Committee on Economic Affairs on Tuesday.
Image source: koronavirus.gov.hu
He said that special attention would be paid to measures that would also support economic growth through the tax system.
He said that international measurements also support the favorable tax changes: of the 37 OECD countries, Hungary had the largest reduction in the tax burden last year.
Compared to 2015, the rate of the tax wedge in Hungary decreased the most among the examined countries, by more than 4 percentage points. This helped economic growth, the minister said. With the changes introduced in the tax system, since 2010 we have managed to gradually shift the weight of taxation from employees and businesses to consumption taxes. He called this much more favorable for economic growth. He recalled that the soco rate under the 2016 agreement will fall from 27 per cent in July this year by another 2 percentage points to 15.5 per cent. The government is determined that “if the opportunities of the economy allow it”, it will be further reduced over the next 2 years.
He highlighted: Compared to 2010, the government has more than doubled the benefits provided to households in the form of family allowances. The lifetime PIT exemption introduced for mothers raising 4 children has been included in the line this year, and its introduction is also being examined for mothers with 3 children. He also recalled that from 2019, the employment of retirees became more favorable because he no longer had to pay a sock to the employer and the employee also only had to pay PIT.
He said about the investment incentive: from 2017, the flat-rate corporate tax of 9 percent – the lowest in Europe – will significantly encourage investment through the tax system. The government has introduced additional rebates, such as the abolition of the 50 per cent limit on the development reserve, which can already be enforced for the 2019 tax year.
Next year, VAT on new homes will be 5 percent again, because it is important to maintain the momentum of housing construction. This year, 25-30 percent more apartments can be built compared to the previous year, I want to maintain this momentum, he indicated.
“While socialist governments have always levied taxes but have not collected them, we are doing otherwise to reduce taxes. And collecting the levied taxes,” the ministry chief said. He stressed that this would also trigger a tax burden. The European Commission’s latest VAT gap study also confirms the results achieved, he pointed out.
He said that the international tax information exchange network has been expanded with EU member states and non-EU countries such as Switzerland. Hungary also has tax co-operation with more than 100 countries.
MEP Anita Potocskáné Kőrösi and Antal Csárdi, LMP representatives, asked for the reconsideration of the adopted amendment to the kata to be reconsidered. Mihály Varga indicated that there is still a dialogue with the business interest groups, who supported it, and 340 thousand cat businesses will not be affected by the amendment.
Vice President Tamás Mellár (Dialogue) disputed the results of the tax system. To this end, the Minister suggested that you look at ratings issued by international credit rating agencies or international institutions. He added that there is no country whose economic performance has not declined in the third quarter due to the epidemic. “Every day we struggle to save jobs,” he said.
Sándor Székely (Independent) suggested when the minimum wage would be 600 euros, or when the salaries of nurses, teachers and law enforcement workers would be substantially increased. According to the minister, it is worth talking about more people taking up work, and the average salary is HUF 400,000 gross. Only 5 percent of the employed receive a minimum wage, and there is a 10 percent wage increase during the epidemic, which is serious feedback.
László Szakács (MSZP) wondered when the 2021 budget would be amended. The Minister said: there is an approved budget. If necessary, it will be modified, but not yet – declared Mihály Varga.