Government tax policy ‘successful’, says economy ministry state secretary

Budapest, December 30 (MTI) – The government’s tax policy has improved the financial situation of families and made it easier for them to buy homes, the economy ministry state secretary responsible for tax affairs told a press conference on Wednesday.

Andras Tallai noted that the government will reduce the personal income tax rate to 15 percent next year from 16 percent, leaving 120 billion forints (EUR 383m) with taxpayers. He said experience has shown that the government was right to introduce the single-rate personal income tax regime. The single-rate tax and family tax benefits left 460 billion forints with families in 2011, 475 billion forints in 2012, 540 billion forints in 2013 and close to 600 billion forints in 2014. The tax policies are set to result in an additional 660 billion forints of disposable income for families in 2015, he said.

The government will increase the monthly tax benefit for families with two children to 25,000 forints, the state secretary said. The tax benefits have reduced taxes for some 1.1 million people, and made 300,000 of them exempt from paying taxes altogether, he said. Tallai noted that the government will double tax benefits for two-child families by 2019.

Tallai said the government expects the reduction of the VAT on newly built residential property from 27 percent to 5 percent to result in the construction sector adding a further 5,000 new homes a year, generating a combined investment of 100 to 120 billion forints.

He noted that the VAT rate on unprocessed pork will also be reduced to 5 percent from 27 percent next year.

The opposition Socialists, in turn, dubbed the Fidesz-led government as that of “brutal tax hikes”, one that favours the rich and fails to leave more money in the pockets of the poor. They said in a statement that the government had introduced several taxes and raised plenty of others, including the VAT to 27 percent, over the past six years.

The 1 percentage point cut in the personal income tax will imply a saving of merely a few hundred forints a year for minimum-wage earners and leave 120 billion forints with the rich. Nor will the “average people” benefit from the lower VAT on newly built residential property as they have no chance at all to buy a home of their own, the Socialists said. The opposition party also repeated its proposal for cutting the VAT on staple food from 27 percent to 5 percent.

Source: http://mtva.hu/hu/hungary-matters