Finance Minister: New Economic Measures to Come into Effect This Year
MTI-Hungary Today 2020.01.02.
New measures as part of the action plan to protect the economy, alongside targeted tax cuts, will come into effect in the New Year with a view to aiding families and businesses, Finance Minister Mihály Varga said on Tuesday.
The tax on small businesses will be cut to 12 percent, reducing the burden on 45,000 Hungarian firms, Varga said in a video posted on Facebook.
The government is suspending the tax on advertising by 2022 and this, he added, would contribute to the market’s expansion.
VAT on accommodation is being cut from 18 percent to 5 percent, resulting in 32 billion forints (EUR 96m) remaining in the pockets of tourism businesses.
Tax administration is also being simplified, with four different contributions combined into a single tax, he said, adding that one type of tax will be abolished altogether.
Households in villages and construction firms in rural areas will be helped thanks to a tax refund of up to 5 million forints for small settlements.
Also, the government is raising 15 billion forints in capital so that businesses can more easily access cheaper investment loans, he said.
Varga said that in order to boost research in Hungary, R+D development support will be increased by 32 billion forints next year. Also, 17 billion forints will be ploughed into an irrigation development scheme each year.
Tállai: Tax burden to decrease further
The government has managed to simultaneously reduce the tax burden while increasing revenues this year, and this additional money is being ploughed into new measures under the family protection action plan as well providing coverage for new tax cuts, a finance ministry official has said in an interview published on Tuesday.
András Tállai, parliamentary state secretary of the finance ministry, told pro-Fidesz daily Magyar Nemzet that the government is already working out the details of a second economic action plan, including measures to further reduce the tax burden.
By the end of November, revenue from corporate and excise taxes, VAT, personal income tax and social contributions increased by 1,300 billion forints (EUR 3.9bn) from the same period last year, with an extra 500 billion forints from VAT alone and 200 billion forints from PIT. This is all thanks to a combination of vigorous economic growth, tax cuts and the dismantling of the shadow economy, he said.
Tax cuts have helped in getting more people into legal jobs with higher salaries, Tállai said. This leads to more taxpayers paying smaller taxes that contribute to bigger overall revenue, he noted.
featured image: illustration (Mihály Varga); via MTI/Zsolt Czeglédi