Orbán reveals radical family support package

Prime Minister Viktor Orbán announcing his program at his annual state of the nation address (photo: Gergely Botár/kormany.hu)

Orbán had said two weeks earlier that he hoped to reveal the family support measures at the address. On Sunday, he presented a seven-point "family defense" program to counter population decline.

First, the government will provide HUF 10 million in preferential credit to all women under the age of 40 who are married for the first time and commit to having a child. Repayments on this credit will be suspended for three years after the birth of the borrowerʼs first child. After the birth of a second child, repayments will be suspended for another three years and one-third of the principal will be paid for by the state. After the birth of a third child, the state will take over all of the loanʼs principal.

According to the programʼs second point, the Home Purchase Subsidy Scheme for Families, known by its Hungarian acronym "CSOK," will be expanded. Preferential loans available under the program may be used for the purchase of resale as well as new homes. Orbán said CSOK conditions tailored to families residing in smaller communities would be announced in a few weeks.

At present, the CSOK thresholds stand at HUF 10 mln for families with two children and HUF 15 mln for families with three children. Under the new scheme, young married couples in Hungary committed to having two children will get start-of-life and home purchase subsidies of HUF 22 mln, while those committed to having three children will get HUF 35 mln, Orbán revealed.

As the third measure, the PM said the government will pay HUF 1 mln of the principal on mortgage loans for families after the birth of their second child. After the birth of a third child, it will pay HUF 4 mln, and the state will pay HUF 1 mln after the birth of each subsequent child.

The fourth announced measure is declaring women who have at least four children exempt from personal income tax for life.

Fifthly, the government will offer families with three or more children a grant of HUF 2.5 mln for the purchase of a car that can seat at least seven passengers.

As the penultimate point, Orbán said the government will create 21,000 places in daycare centers in the coming three years: 10,000 by yearʼs end, 5,000 in 2020, and 6,000 in 2021.

Finally, parents will be given the option of transferring their rights to infant support, known by the Hungarian acronym "GYED," to the grandparents of their child.

The prime minister did not mention the estimated fiscal cost of the measures, but announced two extra programs: the government covering the cost of two two-week foreign language courses abroad for secondary school students, in the ninth and eleventh grades; and the allocation of HUF 700 bln towards healthcare developments.

Annual fiscal impact of package HUF 150 bln

At a press conference later on Monday, Katalin Novak, state secretary for family policy, said the family support measures unveiled by the prime minister on Sunday would cost the central budget about HUF 150 billion a year. This year, the fiscal impact of the measures should be around half that amount, she added.

The governmentʼs expansion of its family support measures is by no means finished, Novak added. She said the HUF 10 mln loan available to women committed to having children would be available from July 1, 2019. Women between the ages of 18 and 40, in their first marriage, and who have worked for at least three years, are eligible for the loan which will be interest-free, she noted.

Further clarifying other points of the package, the state secretary said that CSOK loans will become available for the purchase of resale homes from July 1, 2019. A HUF 35 mln cap on the value of resale homes for which families with children may apply for CSOK subsidies will be scrapped, she added.

The personal income tax exemption for women with four or more children is expected to be introduced only from 2020, Novak revealed. The exemption will apply only to earned income, not to dividends, she added.

GYED rights may be transferred to grandparents only if they are not yet pensioners and if they take child leave, she noted.

The HUF 2.5 mln subsidy for the purchase of passenger cars may cover at most half of the cost of the vehicle, she added.