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State grants tax benefits on anti-debt fund contributions

The Hungarian government decided to make contributions to a fund called "Unite Against State Debt" it established in early April deductable from the tax base, Prime Minister's Spokesman Peter Szijjártó said after a cabinet meeting on Wednesday.

The government set up the fund on the initiative of a Catholic priest, Elemér Rédly, whose parish is in Győr (NW Hungary). The priest launched the fund, aimed to reduce Hungary's state debt with a contribution of HUF 1 million two weeks earlier.

Payments into the fund will be deductable from the tax base of the personal income tax, the simplified business tax EVA and the simplified tax some professionals are paying on their income. The contributions could be deducted over four years.

Businesses will be able to account contributions into the fund among expenses.

The initiative is expected to generate revenue even with the tax benefits, Szijjártó said.

Contributions will ultimately go into the central budget's Pension Reform and State Debt Reduction Fund.

Hungary's state debt stood at 80.2% of GDP at the end of 2010 according to the latest available official figures of the National Bank of Hungary.