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What is known about government budget adjustment packages so far

Recently, events have been accelerating, centered on the government’s fiscal adjustment program. On Saturday, special tax laws and general spending cuts were announced, a new statement was issued by the government, and a 2023 budget was submitted to Congress. portfolio Report.

  • Government legislation on special and additional taxes has been published.
  • The government has announced decisions on spending cuts in 2022 and 2023.
  • Economic Development Minister Marlton Nagy, who created the response package, said the additional tax will reach Hungarian 1 billion (€ 55.2 billion) next year after a surplus of more than 800 billion forint is expected over the weekend. (2 billion euros) this year.
  • Treasury Minister Mihaly Varga submitted a bill on the 2023 budget to Congress on Tuesday. The latter provides a rough estimate of the size of the holes that the special tax will increase and other tax increases can fill.

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The 330-page document does not show that the government is currently budgeting for 2022 expenditures and revenues, and does not show exactly how much each measure will improve, so the budget proposal is It is important to note that it does not show everything. balance.

portfolio The government expects to further strengthen the tax system for the target sector next year, and our estimate is Márton Nagy’s statement that the amount from the “additional profit tax” could reach 1 billion forint in 2023. Is consistent with.

In addition to the special tax increase, there are four tax increases: excise tax, public health product tax, company vehicle tax, and simple employment tax. The total annual impact of these is 9-100 billion HUF (230,000-255 million euros), according to government communications, but similar for these taxes as the government has not specified the amount of additional income expected. Breakdowns and quotations are not possible. It will rise in 2022 as a result of the increase.

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According to the decision, central budget spending could decrease by Hungarian forint 5.81 billion (€ 1.5 billion) this year and another 500 billion forint (€ 1.27 billion) next year. However, these are not included in the 2023 budget.

In addition, in 2022 and 2023, the government will postpone investment worth 1.15 trillion forint (€ 2,933 million), but the exact items affected by these cuts are not clear from the 2023 bill. ..

Overall, the government-announced coordination package is expected to consist of the following key items in 2022 and 2023: portfolio:

  • The additional income from the tax increase is 202.3 billion forint.
  • Ministry spending has been reduced by 1,081 million HUF (2,756 million euros). The question here is how far the implementation of the plan will go down and how much restructuring will be needed.
  • Postponement of investment of 1,150 billion forint (2,931 million euros).

This means a total budget adjustment of Hungarian forint 2,254 billion (€ 10,840 million), which is higher than the expected 7% of GDP this year (total for two years).

The government has justified the fiscal move in its 2023 budget, stating that it needs to find funding to support the newly created reconstruction and defense fund.

Featured Image: Illustration by Károly Árvai / MTI

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