Extraordinary taxes introduced this year by Hungary's government to ensure the country meets its deficit targets could remain in place until 2014, György Kopits, who heads the independent Fiscal Council, said in an interview on public television early Wednesday.
The fine print of the 2011 budget bill could allow the taxes to remain in place as long as 2014, in spite of the government's promise to keep them in place for just 2-3 years, Kopits said.
The crisis taxes on the telecommunications, energy and retail sectors are to generate an annual HUF 161 billion in 2010-2012, Econews reported earlier. A recently introduced bank levy is set to generate HUF 182 billion of budget revenue in 2010, or about 0.7% of projected GDP. It is seen halving the profitability of Hungarian banks.
The 2011 budget draft projects annual revenue from the bank levy of HUF 93.5 billion in 2012-2014. It projects revenue from crisis taxes on the telecommunications, energy and retail sectors of HUF 166 billion in 2012, HUF 85.5 billion in 2013 and HUF 85.5 billion in 2014. It still projects annual HUF 23 billion revenue from the so-called Robin Hood tax of energy providers, to be phased out in 2013, in both 2013 and 2014.
Kopits said the Fiscal Council calculates 102,000 workplaces can be created in Hungary within four years, far fewer than the 400,000 the government wants to create.
Speaking before the parliamentary budget and audit committee later on Wednesday, Kopits said the 2011 fiscal deficit could even be 0.5%-point of GDP lower than planned but the mid-term fiscal path is not sustainable based on known economic policy decisions and the projections in the supplements submitted to the budget bill on Tuesday.
It is a question whether the mandatory private fund assets will finance current expenditure or will reduce state debt, Kopits said.
The gap between pension-related revenues and pension expenditure will not drop significantly beyond 2011 under a 50-year pension projection contained in the new supplements, while the pension fund is still seen to be in equilibrium under the detailed fiscal projections until 2014. To ensure such equilibrium in the next few years would require additional revenues of a size similar to the HUF 530 billion planned to be used in 2011 from the assets of people returning from the private funds to the state pension system, Kopits said.
The government said, however, it plans to use the remainder of the returning private pension fund assets to reduce government debt. This plan is reaffirmed by the budget bill supplements as they project a HUF 1,500 billion decrease of government debt between the end of 2011 and 2012, while financing a HUF 625 billion 2012 fiscal deficit, adding up to a more than HUF 2,100 billion in one-off debt reduction, Kopits said. (MTI-ECONEWS)