Next year’s budget is expected to make everyday living conditions easier, Minister for National economy Mihály Varga said on Monday when he ceremoniously handed the draft of the 2014 Budget to President of Hungary’s Parliament László Kövér.
The Minister delivered the draft in the form of a paper document and on a pen-drive for László Kövér at a press conference held in the Parliament.
Mihály Varga stressed that next year’s budget is expected to be a budget of public utility tariff cuts, as it includes measures aimed at easing the financial burden of households.
The Minister of State said that the cutting of utility tariffs will continue in 2014. Thanks to related measures introduced thus far – including the 11.1 percent additional reduction at the end of this year – Hungarian families are estimated to save on average some 100 thousand forints in 2014.
Through the extension of the scope of family tax allowance, in comparison to this year’s amount the amount left at families will be 53 billion forints more. The Government enables 260 thousand households to fully apply family tax allowance for children which previously they could only partially utilize. As a result, the overall amount left at households will total 230 billion forints.
As Mihály Varga explained, employers who cannot fully deduct this allowance from an employee’s tax base are entitled to deduct it from health insurance or pension contributions.
Concerning changes in student loan he said that the debt of students who are willing to have children will be cancelled, and 4 billion forints will be earmarked for this purpose.
The Minister emphasised that next year’s budget also includes the increase of teachers’ wages within the public education sector, which measure effects 160 thousand teachers in 2014 and carries extra costs of 153.4 billion forints.
Mihály Varga underlined that the 2014 Budget also incorporates the subsidies for participants of the Start programme within the public work project; for the public work programme of this winter – between November 2013 and end of April 2014 – 30 billion forints are appropriated in the budget. The measures of the Job Protection Action Plan and the employment incentives this scheme provides will remain effective in 2014 as well, he added.
There is not a single chapter in next year’s budget which would have lower funds for next year in comparison to this year, and potential shortfalls are covered by a significant amount of reserves, the Minister for National economy said. Mihály Varga emphasised that along with the Country Protection Fund of HUF 100bn another reserve fund with HUF 120bn serves as cover for extraordinary expenses.
The Government drafted the 2014 Budget projecting household consumption increase of 1.9 percent and real wage increase of 2 percent, Mihály Varga said. After this year’s hike of 5.2 percent, pension benefits will be raised by 2.4 percent, which corresponds to the anticipated increase in inflation. The Minister for National Economy also spoke about the introduction as of 1 January of the so called gyed (child care allowance) extra, which will be applicable only by new gyed beneficiaries, because the 2.9 percent deficit target shall be met as the Government does not want the country to be back under the excessive deficit procedure.
President of the Parliament László Kövér underlined at the press conference that next year’s budget also aims to place Hungary back on a growth path. He stressed that in comparison to 2013 funds for healthcare, public education and public safety will increase by 10 percent, 12 percent and 3 percent, respectively.
The President expressed his appreciation for the timely submission of next year’s draft budget to the Parliament and he also praised Government efforts which resulted in Hungary’s exit from the excessive deficit procedure this year through which the country avoided the cutting off of substantial EU funds.
“In the first half of the year, the 500-billion fiscal gap created by the not-too-skilled Government of Prime Minister Bajnai had to be filled which they had left us in the 2010 Budget. The state budgets which followed all tried to cure the economic ills brought about by this legacy,” László Kövér said, adding that the Government hopes that with this Budget Hungary will be back on a growth path.
Responding to questions, Mihály Varga said that the 2014 Budget enables the cutting of VAT on meat, however, the Government has not yet decided on the details of this measure. Tax regulation amendments will be submitted to the National Assembly within two weeks, he added, upon which the finishing touches are being applied. He informed the audience that the Budget includes the “theoretical possibility” of lowering VAT on meat, but no decision has been made yet about the scope of the new VAT regulation and the size of reduction.
As far as the plight of foreign currency debtors is concerned, the Minister said that a window of opportunity is open for banks, and the Hungarian Banking Association, until 1 November to improve existing programmes aimed at assisting foreign currency debtors, although many of them have not grasped this opportunity. Professional coordination between the Government and commercial banks will continue until 1 November, and in case banks will not have made necessary steps until that date the Government will table its own proposal concerning this issue, Mihály Varga said.
(Ministry for National Economy)
