BUDAPEST: Hungary will offer banks that substantially boost lending to companies a tax rebate, the government said on Thursday, as Prime Minister Viktor Orban rolls out “world-beating” stimulus measures ahead of an election in 2018.
The proposal to waive some financial transactions tax payments follows cuts in payroll and corporate taxes for companies and hikes in the minimum wage to combat weaker third-quarter growth and deteriorating competitiveness.
Underscoring the need for action, Economy Minister Mihaly Varga said economic growth would come in below the government’s 2.5 percent projection this year and is now seen in the 2 to 2.5 percent range depending largely on fourth-quarter consumption.
“We will table a modification saying that for banks whose corporate loan stock increase exceeds a given percentage, we see a possibility of foregoing part of the financial transaction tax,” Varga told reporters on the sidelines of a conference.
The minister said the rebate, which would carry an upper limit, would be available to banks that increase their corporate loan stock by at least 20 percent.
The ministry said banks would need to show that kind of loan growth in two years compared to end-2015 levels to be eligible for the rebate, which could not exceed 80 percent of the original tax obligation, or 300 million forints. The tax had been due to raise 202.5 billion forints ($690 million) in 2017.
Varga later told a parliamentary committee hearing that 2017 economic growth could come in significantly higher than the government’s earlier 3.1 percent forecast, but did not provide a specific estimate. He said inflation could also accelerate.
