Mihály Varga announced tax cuts and tax simplifications

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The decision has three pillars:

• tax reduction
• simplification of tax administration,
• investment promotion.

These have been the focus of fiscal policy for years, but measures must be accelerated, the finance minister said, announcing the following measures:

• The government decided to reduce the small business tax from 12% to 11% on January 1, and has now also decided to double its value limit to 3 billion guilders, so that more businesses can choose.
• The administration of more than 1.5 million cases from the public administration will be free next year, which could leave HUF 5 billion for families and businesses, and the administration will be faster.
• Starting in the second half of 2021, the tax office will prepare a draft VAT return for each company, exempting half a million companies.
• Next year, the HUF 10 billion ceiling on company development reserves will be lifted, which may induce even more investment.
• All epidemiological screening tests will be tax-free, so you can save more than 7,000 guilders per test.

The government will continue to cut taxes, simplifying bureaucracy so that the economy can return faster to its growth trajectory before the epidemic, the minister emphasized at the end of his video.

Varga also told the radio

Recovery from the crisis will be slow across Europe, economic change is expected in the first half of 2021: Kossuth Rádió said good morning on Monday, Hungary! in your program. According to Mihály Varga, the situation in Hungary is in many ways more favorable than that of other European states, but the recovery will still be delayed.

He called it a favorable circumstance that according to the data so far, neither the wage growth rate nor the retail turnover fell compared to last year, and the domestic labor market is also performing well in the international comparison. However, export opportunities are limited because foreign markets will weaken when the coronavirus drug is launched, he added.

The ministry head hopes in part that the investments will replace the jobs lost. According to Mihály Varga, it is worth developing the leading sectors of the Hungarian economy, namely the food industry, the pharmaceutical industry and the automotive industry. The government, as has been said, wants everyone to be able to meet market conditions and it does not seem necessary to place a significant number of job seekers in public employment.

The finance minister also referred to the country’s debt rating. At the beginning of the year, Hungary could expect a better rating from all the major international credit rating agencies, so the pandemic came at the worst time in this regard, he emphasized. At the same time, he welcomed the fact that Moody’s upgraded the outlook on Hungary’s debt rating last week, because none of the institutions have upgraded their European state rating since the start of the crisis. The credit rating agencies are now waiting, but they see that Hungary is reacting to the new situation, so its difficulties will be only temporary, he added.

MTI / Attila Kovács