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Hungarian Parliament Approves Next Year’s Budget


Hungary’s Parliament has passed the 2016 budget bill in a final vote on Tuesday months ahead of the legal deadline, with 119 votes in favour and 63 against. The Budget Act calculates with a budget deficit of 2% of gross domestic product (GDP) based on EU accounting rules and public debt  of  73.3% of  GDP. The budget targets  total  revenue of  15,800  billion forints  (EUR  50.7bn), total expenditures of 16,561 billion forints and a deficit of 761 billion forints.

Next year’s budget “equals lower taxes and safe jobs for families,” Mihály Varga, the economy minister, told a press conference after the vote. By passing the budget, lawmakers have expressed support for the government’s policies of cutting taxes, creating jobs, raising wages and supporting investment, he said. Varga confirmed the government’s expectations  of 2.5% economic growth and 1.6%  inflation,  as  well  as reducing the national debt below 74% before the end of next year. Next year more money will be spent on health, education, public safety,  and rural development, he said.

The minister said that the government’s job protection scheme would be rolled out to agriculture, and employers would benefit from tax reductions totalling 138 billion forints in 2016. He added that next year 240,000 people,  40,000 more than this year, would be offered fostered jobs at a cost of 340 billion forints, up from 270 billion in 2015. Teachers will be granted another  10%  pay rise in September next year, while law-enforcement career  models – involving  a  30% pay hike – will be introduced before the end of this year. He added that a total of 15.3 billion forints will be spent on raising the incomes of young doctors. The legal deadline for submitting budget bills is October 15 of the preceding year, except for election years, but the government said earlier it aimed to see next year’s budget approved before the end of parliament’s spring session.

The green opposition LMP criticised the budget for what it saw as “meagre tax cuts”. Lawmaker for the party Erzsébet Schmuck said the tax cuts would amount to just 0.5% of GDP, and based on this it can “hardly be called a budget of tax reduction”. Speaking after the vote, in which her party rejected the budget, Schmuck called for closing the  wage gap for low earners and stressed that 4 million people were living below subsistence levels. Reducing the personal income tax would only increase  social differences and poverty further, she insisted.

The left-wing Democratic Coalition (DK) said the government had “left millions of people in shallow water”. DK deputy leader László Varjú said that next year taxes would continue to weigh heavily on employees, while Hungary’s VAT is at a “record high” and would “boost the illegal economy”. The budget will not promote job creation, and though the government forges strategic partnerships, new positions are only offered in fostered work schemes, he said.

via and MTI photo: Gergely Botár –