2017 budget plan includes VAT cuts for food, internet

Analysis

The draft 2017 budget that Hungary’s Economy Ministry will submit to the Fiscal Council today includes reductions in the value-added tax for milk, eggs, poultry and internet services, Economics Minister Mihály Varga said today, according to Hungarian news agency MTI.

The Council has ten days to deliver an opinion on the draft. The government will submit the budget bill to lawmakers on April 26, Varga said. 

The VAT rate on milk, eggs, and poultry could be lowered to 5% , and the VAT rate on catering services cut to 18%, with a further reduction to 5% in 2018, Varga said. The VAT rate on internet services is set to fall as well, he added.

The deficit is targeted at 2.4%, though the budget will be “balanced”, Varga said, echoing earlier plans to borrow only to cover investments and debt repayments, but not for the day-to-day operations of the state. The ratio of state debt to GDP will continue to fall, he added.

The budget draft assumes 3.1% GDP growth next year, he said, adding that the faster growth, as well as measures to crack down on tax evasion, will cover the shortfall in revenue from the VAT cuts as well as spending on a home purchase subsidy program for families with children.

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