Government submits 2016 budget bill

Telco

National Economy Minister Mihály Varga ceremoniously submitted the 2016 budget bill to House Speaker László Kövér in parliament today, Hungarian news agency MTI reported.

Before submitting the bill, Varga confirmed earlier announced measures that would save households HUF 170 bln next year, including HUF 120 bln as the result of a reduction in the personal income tax rate from 16% to 15%, HUF 25 bln in savings from a reduction in the VAT rate on unprocessed pork, HUF 15 bln from increased family tax preferences and HUF 10 bln from lower state administration fees.

The budget bill assumes 2.5% GDP growth and 1.6% inflation. It targets a general government deficit of around 2% of GDP.

Kövér said Parliament could approve the budget on June 22 or 23. The general debate will start on May 27, he added.

The 2016 budget bill targets revenue of HUF 15,790 bln, expenditures of HUF 16,551 bln and a deficit of HUF 761.6 bln. It projects nominal GDP of HUF 35,188 bln.

The bill targets VAT revenue of HUF 3,351.9 bln, up from HUF 3,172.4 bln in the 2015 budget.

Revenue from personal income tax is targeted at HUF 1,658.4 bln, up from HUF 1,639.7 bln in the 2015 budget.

The bill targets revenue from the bank levy of HUF 89.2 bln, down from HUF 144.2 bln in the 2015 budget, confirming the governmentʼs earlier announced plan to cut the tax by about HUF 60 bln in anticipation it will boost lending activity.

The advertising tax is set to bring in HUF 10.9 bln, compared to HUF 6.6 bln in 2015. The government has proposed changing the rate of the tax to 5.3% on a tax base over HUF 100m.

The bill targets revenue from the telco tax of HUF 56.0 bln, down slightly from HUF 56.4 bln for this year. The target for revenue from the utilities tax was lowered to HUF 52.2 bln from HUF 54 bln.

Revenue from the financial transactions duty is targeted at HUF 200.9 bln, down from HUF 206.2 bln in the 2015 budget.

Revenue from corporate tax is targeted at HUF 400.5 bln, up from HUF 341.4 bln in the 2015 budget.

Revenue from duties and fees paid by households is set to edge up to HUF 121.7 bln from HUF 120 bln in 2015.

The allocation for fostered work programs would rise by HUF 70bn to HUF 340 bln next year, ensuring participation for 240,000 Hungarians. The bill would allocate HUF 138 bln in support for companies that hire disadvantaged workers.

Among expenditures related to state-owned assets, the budget bill allocates HUF 15.5 bln for purchases of foreclosed homes by national assets manager NET, down from HUF 30.3 bln in the 2015 budget.

HUF 27.3 bln is allocated for developments necessary to host the FINA World Aquatics Championships in 2017.

The budget allocates HUF 100 bln for "extraordinary government measures" and HUF 100 bln for the National Protection Fund. A further HUF 135.4 bln is allocated for the expansion of career path models in the public sector.

State debt is projected to fall to 73.3% of GDP by the end of 2016 compared to 74.3% at the end of this year.

The budget bill targets state debt of HUF 25,898.5 bln at the end of 2016, assuming a HUF/EUR exchange rate of 303.7, a HUF/CHF rate of 289.4, and a HUF/USD rate of 276.3.

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