“The government must strive to maintain fiscal discipline even during the coronavirus epidemic, but we must not doggedly insist on keeping the budget deficit under three percent, because preserving jobs and rebooting the economy must now be given priority”, Minister of Finance Mihály Varga said on Kossuth Radio’s “Sunday Paper” show.
Mr. Varga said that the previous scenario according to which the Hungarian economy will continue to grow this year must be placed in brackets. “In all probability there will be shrinkage and a downturn, the level of which is currently estimated to be around 3 percent, but the final figure is greatly dependent on the development of the epidemic situation, and on when the economy can come out of quarantine”, he explained, adding that events are being continuously monitored.
He highlighted the fact that the Hungarian economy is now in a much more crisis-resistant state than it was at the time of the 2008 crisis even according to the International Monetary Fund (IMF), which is enabling it to survive the standstill caused by the epidemic while suffering much less damage.
“Preserving and protecting workplaces is the most important goal, in the interests of which the government is assisting enterprises with job preservation funding, credit, guarantee instruments, capital replacement and tax measures”, the Minister emphasised, adding that the Cabinet is performing the finishing touches to a new credit and guarantee package, the details of which will soon be made public.
He also said the government’s employment package is aimed at preserving and protecting workplaces, and tax concessions represent the fastest and most effective assistance for families and enterprises to ensure that the latter survive the crisis being caused by the coronavirus epidemic with as little damage and while preserving as many jobs as possible. Mr. Varga underlined that the tax concessions introduced by the Cabinet to date will leave some 200 billion forints (EUR 567 million) in the pockets of enterprises and families.
The Minister said it is important that the government is also fulfilling its previous undertakings, mentioning as an example this year’s two percentage point reduction in the rate of social contributions tax from 17.5 percent to 15.5 percent, which will provide 160 billion forints (EUR 453 million) in assistance to enterprises over a period of six months.
He emphasised that over 600 thousand enterprises are being given the opportunity to submit their tax returns in September rather than this spring, which represents major financial assistance to them. “In addition, the government is also enabling all enterprises to request a tax reduction, payment in instalments or payment deferment with relation to up to five million forints in tax”, he stated.
Mr. Varga said the reduction in the rate of small business tax (KIVA) from 12 percent to 11 percent also represents 10 billion forints (EUR 28.3 million) in tax concessions to some 50 thousand enterprises.