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Parliament approves 2021 budget

Lawmakers approved the governmentʼs 2021 budget today, with a vote of 133 for, 61 against and, 0 abstentions, according to a report by state news wire MTI.

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The budget targets expenditures of approximately HUF 23.465 trillion and revenue of about HUF 21.974 tln, resulting in a deficit of HUF 1.491 tln.

It targets a 2.9%-of-GDP deficit, calculated according to the European Unionʼs accrual-based accounting rules.

The budget targets a decline in state debt as a percentage of GDP to 69.3% at year-end from an expected 72.6% at the end of 2020.

It assumes 3% annual average inflation, level with the National Bank of Hungaryʼs mid-term "price stability" target.

The budget contains reserves equivalent to more than 0.5% of GDP.

The budget has an independent chapter for a "Health and Pandemic Defense Fund" with expenditures of more than HUF 2.944 tln. It also has an independent chapter for an "Economic Defense Fund" with expenditures of about HUF 2.610 tln.

The budget targets net debt servicing costs of HUF 970.8 billion.

On the revenue side, corporate profit tax is set to generate HUF 538.5 bln, while the Itemised Tax for Small Businesses (KATA) brings in HUF 237.4 bln and the Small Business Tax (KIVA) HUF 97.4 bln.

Revenue from the bank levy is targeted at HUF 61.4 bln, while the sectoral tax on energy suppliers is set to come to HUF 60.6 bln.

Revenue from VAT is targeted at HUF 5.015 tln and revenue from excise tax at HUF 1.263 tln. Revenue from the financial transactions duty is seen reaching HUF 218.8 bln.

Revenue from personal income tax is targeted at nearly HUF 2.684 tln.

A "solidarity contribution" by local councils will raise HUF 165.5 bln. Local councils pay the contribution on a progressive scale, based on their revenue from Local Business Tax (HIPA) per resident.

On the expenditure side, spending on pre-natal baby support is set to come to HUF 67.7 bln.

Spending on home subsidies is targeted at HUF 249.6 bln.

The budget earmarks HUF 77 bln of expenditures for a gradual re-introduction of an annual bonus for pensioners.

It allocates HUF 25 bln in support of investments at big companies.