Hungary's budget correction would not be possible without increasing the tax burden, Finance Minister János Veres said on Thursday.
He added that the amount to be spent on price subsidies will be reduced by Ft 150 billion (€583.7 million) to Ft 600 billion next year as a result of legislative and regulatory amendments. Speaking at a tax conference organized by KPMG, the finance minister said that this year's modified 10.1%-of-GDP general government deficit will be 3.3% lower next year, of which 2.1% will come from expenditure cuts and 1.2% from increased revenues. Veres added that the deficit will be reduced by a further 2.5% in 2008, which will be entirely the result of expenditure cuts.
The budget targets spending of Ft 750 billion on price subsidies in 2006. Amendments already approved, primarily those concerning medicine and gas price subsidies, will reduce price subsidy expenditures by Ft 150 billion next year, according to the finance minister. In response to a question, Veres commented that gas prices will be based on market prices next year, while subsidies will be based on social factors, thus reducing the total amount of gas price subsidies to Ft 112 billion in 2007. (Mti-Eco)