BUDAPEST: Hungary’s Minster Mihály Varga announced that Hungary’s Economy Ministry proposes to reduce personal income tax (PIT) from 16% to 15% from 2016, Mihály Varga announced after talks with ruling Fidesz-KDNP leaders on Hungary’s next year budget.
The Economy Minister also said that the VAT rate on pork is planned to be slashed to 5% from 27% currently, and that the tax benefit for families with two children is to be raised further next year. The planned reduction of the PIT and other fees and duties would reduce budget revenues by HUF 130 billion, Mihály Varga said. The budget plan will be submitted to Parliament by 13th of May, he added.
Mihály Varga said the performance of the Hungarian economy has improved significantly over the last few years therefore it is worth considering how to distribute the wealth created. He admitted that public debt remains sizeable but added it is on a descending path. These factors allow the cabinet to plan ahead with a clear head and conduct the debate on the budget much earlier than usual. Although the use of EU funds will drop temporarily, the cabinet expects GDP to grow by 2.5% in 2016 after 2.5-3.0% this year, Varga said. The government expects inflation to remain between 1.8% and 2.0% next year and the budget gap to come in at 2.0% of GDP in 2016 after 2.4% expected this year.
