Government expects fuel VAT cut to raise turnover
Thursday, October 6, 2005, 11:20
The government expects the reduction in the VAT rate for vehicle fuel to discourage Hungarians from tanking up in other countries and raise turnover at pumps in Hungary by "a few percentage points", Finance Minister János Veres announced on Saturday, the day the reduction came into effect. Veres said earlier that the VAT reduction, from 25% to 20%, would lower prices at the pump Ft 10-11. Veres added that the government had decided to reduce the VAT rate, instead of the excise tax rate, because a shortfall in excise tax revenue would have widened the budget deficit and taken away money available for social expenditures. The government will make up for the Ft 160 bln shortfall in VAT revenue resulting from the cut next year by reducing ministries' expenses by 10%. The cost cuts at the ministries will not translate into layoffs, Veres said.