Varga: Gov’t in no hurry to lower general VAT


(Photo:éza Dede)

The Hungarian government has a long-term plan to reduce the general VAT rate from 27% to 25%, however, this is not likely to happen right away, National Economy Minister Mihály Varga said in an interview published in business weekly Figyelő today.

Mihály Varga, speaks at the Hungarian-German economic forum in Cologne on April 19. (Photo:éza Dede)

The government recently announced plans to cut the VAT rate on milk, eggs and poultry from 27% to 5% and reduce the VAT on internet services and catering to 18%. Varga said the reduction of VAT on catering was fueled by a plan to boost tourism revenue which is heavily impacted by catering revenue, according to the paper.

Responding to a query about the reduction of personal income tax from the current 15% into the single digits, Varga said that he hopes to meet this goal by 2020, however, he noted that every percentage point reduction results in a HUF 120 billion shortfall in budget revenue, the paper reported.

The budget for 2017 has targeted an additional revenue of approximately HUF 600 bln as a result of the government’s crackdown on tax evasion, Varga said, according to the paper. State debt as a percentage of GDP is expected to drop to 74% by the end of next year, he added.

Speaking about the governmentʼs plans to accelerate the absorption of European Union development funds for the 2014-2020 funding cycle, Varga said that the EU voiced its concerns over the Hungarian government’s offer to pre-finance projects up to 50%, citing the potential of graft, the paper reported.

“Weʼve introduced close monitoring that can quickly stamp out abuse and the mismanagement of funds. Based on our experience, we may even propose that the government roll back the payout system to the previous one, at a later date,” Varga said, according to Figyelő.


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