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Recently announced measures expected to cause HUF 441 bln fiscal deterioration in 2013

Telco

Measures announced by the government since the end of June are likely to have a net negative effect of HUF 441 billion on the 2013 fiscal balance, the staff of the National Bank of Hungary calculated.

The two biggest factors affecting the balance are measures included in the Job Protection Plan that have a HUF 243 billion negative impact on next year's budget and changes to the planned financial transactions duty that translate as a HUF 203 billion shortfall in revenue, the staff said in the MNB's latest quarterly Inflation Report.

The staff estimate targeted preferences that are part of the Job Protection Plan will cause the fiscal balance to deteriorate by HUF 99 billion, while a new tax small businesses may opt to pay will result in a HUF 144 billion fall in revenue.

With regard to the financial transactions duty, the staff said it took into account a cap on the duty written into the legislation as part of a deal with banks. They did not consider the extension of the duty as a measure improving the fiscal balance with a lasting effect as it does not improve the accrual-based fiscal balance yet in 2013. They also noted that the European Central Bank and the European Commission both aired concerns on levying the duty on the central bank.

On the expenditure side, the staff noted the allocation, in the autumn, of HUF 42 billion for the establishment of a usage-based electronic road toll system which is to be spent next year.

The staff assumed that HUF 40 billion in revenue targeted from a mobile frequency would arrive in 2013, instead of 2012, as the initial tender was annulled by a court in September.

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