A new budget, new tax system and new employment policy will be established in Hungary next July if current opposition party Fidesz forms the country's next government, Fidesz economic policy maker György Matolcsy told MTI on Thursday.
The new government should sign a new stand-by agreement with the IMF containing better conditions that will improve the stipulations of securing loans on international private markets as well by counterbalancing the effects of “bad news,” including the real budget deficit, Matolcsy added.
Fidesz has got three scenarios for the tax system: one proposing a radical cut of personal income tax with a flat family rate; another which would decrease rates of all kinds of taxes; and a third which would cut social-security and health-insurance contributions only for employers and employees alike.
Fidesz will consult all sides of economy before making a decision, Matolcsy said.
Growth of the local market and exports and cutting back on bureaucracy should provide resources for tax cuts, Matolcsy said.
The new state budget will “confess the real amount of the deficit and will handle that,” Matolcsy said but declined to comment on possible methods of “handling.” The Fidesz official conceded that the present budget was a “crisis budget,” but emphasized that it was not handling the crisis and would instead contribute to its deepening.
Among the downside risks concerning the budget adopted by parliament for next year, Matolcsy listed a higher-than-expected fall in consumption, smaller credit outflows, unemployment, declining investments and slower-than-expected inflation, all resulting in smaller tax revenue.
The new government cannot accept that HUF 1,200 billion-1,300 billion will be missing from the budget next year and the overall deficit could be 7.5% of GDP or more, he said. At the same time, Fidesz will not prepare new austerity measures apart from cutting back on bureaucracy, and “will work on economic growth,” Matolcsy said.
On a world scale, he expected a return to sustainable growth from 2013 and added: even with Fidesz in government, Hungary will not become “Canaan.” As he put it: “even Fidesz can not turn recession into growth within one year,” but its programs, including enhancing energy efficiency, development of environment industries and new public work programs, might help. (MTI-ECONEWS)