The government will have to cut spending by HUF 200bn-220bn this year in order to preserve budget balance, Prime Minister Ferenc Gyurcsány told Parliament when announcing a planned tax package on Monday.
Government spending must be cut by HUF 550 billion compared to original plans next year and by HUF 650 billion in 2011, he said.
The cuts will require the execution of a series of long-delayed structural reforms Gyurcsány said noting that planned tax changes will on the whole be neutral.
Gyurcsány said they will initiate changes in five fields, including the tax, the social, the pension system, in the field of economic policy subsidies and sectoral support and on the political and government structure.
Tax changes proposed by the government will be neutral to the budget balance this year, with tax reduction worth HUF 800 billion – HUF 900 billion and tax rises of the same volume, Gyurcsány said.
In 2010-2011 the tax changes will result in a slight net drop of budget revenues, he said, adding that the revenue shortfall will not be more than some HUF 10 billion. (MTI – Econews)