Hungarian Election Partners Announce Voter-Friendly Tax Cuts

by Ulrika Lomas, Tax-News.com, Brussels

01 October 2001

Hungarian Finance Minister Mihaly Varga has announced a package of amendments to finance laws including tax free pensions, incentives to be given to families building their own houses, and support for family farms, but the opposition called the amendment proposals nothing but part of the election campaign.

Hungarian elections are due early in 2002, and this week ruling Government party Fidesz signed a co-operation pact with junior coalition partner the Democratic Forum (MDF). The pact was signed by Fidesz President Zoltán Pokorni and MDF President (and Hungarian Minister of Justice) Ibolya Dávid, who is said to be the country's most popular politician, and will rank second on the electoral list behind Prime Minister Viktor Orbán. Both parties agreed to launch joint national and regional lists under the name "Fidesz-MDF".

Government parties welcomed the amendment package because they consider that there is a need for increased support. However, the Socialists and Free Democrats criticized the proposals partly because, they say, it is against the constitution to lump together amendments of different laws which are not otherwise connected.

The consensus forecast for Hungary’s 2001 economic growth fell 36 basis points to 4.29% in a poll of 17 analysts last week. Other economic indicators are mixed: Construction of complete structures and civil engineering work increased by 6.2% year-on-year in July and was up 6.3% in the first seven months as against the same period in 2000; Real wages for full-time employees increased by 4.4% in January-July from a year earlier as the result of a 15.1% rise in net wages and a 10.3% increase in consumer prices in the first seven months, according to figures from the Central Statistics Office (KSH). In the first seven months, average gross wages were Ft 96,953 per month, 16.5% higher than in the same period of last year.

The MNB said the final figure for Hungary’s current account surplus in July is Euros 191 million, up from the preliminary Euros 175 million. The final January-July current account deficit was Euros 624 million, down from Euros 856 million in the same period last year. The trade deficit was Euros 110 million in July, down Euros 84 million on the same month last year.

The number of Hungary’s registered unemployed fell below 350,000 in August for the first time in the past ten years. The number of jobless declined in all seven regions with the exception of southwest Hungary.

Hungary’s industrial output rose 1.4% in July from June, but fell 0.8% compared to the same month last year, according to figures of the Central Statistics Office (KSH). In the first seven months, industrial output rose 6.6% compared to the same period of 2000.

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