“In addition to supporting families, the 2020 budget is also about protecting the economic results achieved so far and continuing tax reductions”, Minister of Finance Mihály Varga said on Wednesday in Parliament.
During the general debate on next year’s budget, the Minister said the main goals were to support families and provide the funding for the Economy Protection Action Plan.
According to Mr. Varga, the Government is once again submitting the budget bill using “two plus two logic”: “We want to reduce taxes and sovereign debt, and increase wages, investment and the number of workplaces; our goal is full employment”.
“The Government has submitted a budget bill to the National Assembly that primarily provides assistance and security to families and people who are starting a family or are already raising children; the goal is for Hungary to be a family-friendly place and children continue to be of primary importance to the Government”, he said.
He stressed that in 2020 all priority areas will have more resources to spend compared to 2019. In addition to supporting families, these areas include education, healthcare, pensions, public sector wages, and security and law enforcement expenditure.
“The goal of the Economy Protection Action Plan is to protect the results achieved by the Hungarian economy to date”, he added. “The Plan assures the maintaining of economic growth of around 4 percent in the upcoming years at a rate that is at least 2 percentage points higher that the European Union average even in the event of a slowdown in the external environment”, he explained.
The Minister also stated that the Government will continue to take determined action against the immigration that is threatening Europe and the related threat of terrorism, and against unfavourable consequences that affect public safety.
“Next year, in addition to a dynamic rate of growth of 4 percent, we are calculating with a low level of inflation of 2.8 percent and a lower than ever before target deficit of 1 percent, in addition to which, in the interests of protecting against and handling external risks, we are recommending a safety reserve equal to 1 percent of GDP”, he stated.
“The debt ratio calculated according to EU methodology could fall to 66 percent next year”, the Minister added. “This ratio was 80 percent when the government took office in 2010”, he pointed out.
Mr. Varga also said that the 2020 budget is once again a balanced operating budget, meaning that the state is continuing to finance public service expenditure from its operating revenues.
According to the Minister, in 2020 there will be a total of 2200 billion forints (EUR 6.8 billion) available for supporting families and the implementation of the Family Protection Action Plan, and 500 billion forints (EUR 1.54 billion) will serve to promote the growth of enterprises within the framework of the Economy Protection Action Plan.
“In 2019, there will be 224 billion forints (EUR 691 million) in additional funding for supporting families, 48 billion (EUR 148 million) for education, 185 billion (EUR 571 million) for healthcare, 136 billion (EUR 420 million) for pensions, 238 billion (EUR 735 million) for public sector wage increases, and 174 billion forints (EUR 537 million) in additional funding for defence and law enforcement expenditure”, he added.
In addition to the Family Protection Action Plan, among measures aimed at assisting families he mentioned the 15 percent rate of personal income tax and the family tax system, the increase in home nursing payments, the free supply of school textbooks, the increasing student grants, and the continuation of the Home Creation Programme.
He listed the elements of the Economy Protection Action Plan, including the 1 percent decrease in social contributions tax from 1 July, which will leave 144 billion forints (EUR 444.1 million) with enterprises this year and 156 billion forints (EUR 481.9 million) in 2020, enabling them to realise investments, development projects and wage increases. The small business tax is being reduced, the simplified entrepreneurial tax is being abolished, enterprises that realise over 100 million forints (EUR 309,000) in annual turnover will no longer have to pay part of their taxes in advance next year, the advertising tax is being suspended, and commercial accommodation services will be paying taxes according to a preferential rate of VAT.
According to the Minister, from the autumn of this year funding for the construction and/or refurbishment of workers’ accommodation will also be available to privately-owned companies, not just local governments. “The minimum level required for enterprises to be eligible to receive development funding is being gradually decreased, the capital of Garantiqa Credit Guarantee Co. Ltd. will we increasing by 10 billion forints (EUR 31 million)and that of the Rural Credit Guarantee Foundation will be increasing by 5 billion forints (EUR 15.5 million), and 17 billion forints (EUR 52.5 million) in additional funding will be available each year for irrigation development from 2020”, he added.
“In the interests of there being as much and as successful research as possible being realised in Hungary, and additional 32 billion forints (EUR 99 million) in resources will be guaranteeing the funding of research # development in 2020”, he stated.
The Minister reported on the fact that another multi-step wage increase will be occurring within the healthcare system, and the resources are available for the financial recognition of people working in law enforcement administration, nursery schools and government administration.
He also pointed out that pensions increased by almost 30 percent between 2010 and 2018, and their purchasing power has increased by over 10 percent. “Next year, in addition to an inflation-linked pension increase, pensioners can also expect to receive a pension premium”, he stated.
Mr. Varga said the vast majority of tenders for EU funding for the period 2014 to 2020 had been successfully closed in 2018, and from 2019 the focus is on the realisation of projects. “In 2020, the Government plans to pay out almost 1700 billion forints (EUR 5.25 billion) via structural, rural development, fisheries and other EU funding types, and expects the influx of almost 1500 billion forints (EUR 4.63 billion) in European Union funding”, he stated.
He also stressed that the central budget resources relating to the performance of tasks by local governments will remain fully available next year, and local authorities will have a total budget of over 2950 billion forints (EUR 9.11 billion) available in 2020 without a credit source, in addition to which the central budget will be providing over 735 billion forints (EUR 2.27 billion) in funding.
Mr. Varga also reported on the fact that the finances of the Pension Insurance Fund are in balance, and the maintaining of this balance is not placing an additional burden on the budget. “We are also calculating with a balance of income and expenditure at the Healthcare Insurance Fund”, he stated.