Finance Minister Mihály Varga described the 2020 budget as the budget of families on Kossuth Radio’s programme Sunday Paper.

The Finance Minister said next week the government will submit to Parliament a family-friendly budget which seeks to reverse today’s demographic trends. He added that officially they had not yet given the 2020 budget a name; based on initial signs, however, it would not be far-fetched to give it the name ‘budget of families’ as it will contain a number of elements which seek to provide assistance and security for families, young people about to have children and couples raising children.

Mr Varga said from next year it will be a great help for those living in small settlements that the VAT on the refurbishment, extension and construction of housing properties will be reclaimable up to five million forints, provided the VAT content of such expenses is verified on the basis of invoices. In practice, this means that in settlements eligible for the family housing benefit for small settlements (better-known as village ‘csok’), VAT up to construction costs amounting to some HUF 30 million will be reclaimable.

The Finance Minister mentioned that it is a major concession for businesses with an annual sales revenue above HUF 100 million that the previous deadline of 20 December for the replenishment of tax liabilities will be done away with, and as a result, the businesses concerned will only be required to pay their total outstanding tax liabilities in May, simultaneously with the submission of their tax returns. Based on the latest favourable economic indicators, the budget has scope for accessing the some HUF 150-170 billion arising from the replenishment of tax liabilities only five months later, Mr Varga said.

Among the positive figures, he mentioned last year’s 2.2 per cent budget deficit, and the 5.3 per cent economic growth in the first quarter of this year which even exceeded the government’s optimistic expectations.

He also said that, as part of the economy protection action plan, the social contribution tax will decrease by 2 percentage points, while the tax for small businesses will be reduced from 13 per cent to 12 per cent.

Mr Varga highlighted that the tax benefit for development purposes provides access to tax benefits of this nature not only for companies implementing projects worth more than HUF 500 million, but equally for small and medium-sized enterprises carrying out developments worth HUF 50 million to 100 million over a period of three years.

The Minister confirmed that the economy protection action plan will provide help in the magnitude of HUF 400-500 billion for the actors of the economy, and could contribute to enabling Hungary to protect the results achieved by the Hungarian economy well above the EU average in recent years.

The Minister additionally observed that while in 2010 tax centralisation was the highest in Hungary, today we are in the vanguard of the Visegrád countries, and also in the future the government is planning to continue the reduction of tax centralisation. The goal of the government is for taxation not to thwart, but to promote the activity of businesses, Mr Varga underlined.

(Ministry of Finance)