Economy
Hungary Finmin sees several factors allowing rate cut
Hungary's Parliament is to address next year's tax regulation today.
The Finance Ministry calculated that next year's taxes would increase the burden of business by HUF 70 billion but at the same time tax burdens would be reduced by HUF 194.7 billion, resulting in a HUF 125 billion “surplus" for businesses.
A chart of the ministry showed that the government expected gross HUF 42 billion to be gained by the extra tax to be levied on financial institutions next year. The net “income" would be HUF 31-32 billion, ministry spokesman Ferenc Pichler told portfolio.hu.
As for the Simplified Entrepreneurial Tax (SET), Draskovics said the EU would not address the Hungarian tax regime at its 14 October meeting, and so it seems there no changes will have to be effected in SET regulations in 2005.
Draskovics said that September's CPI data underpinned the assumption that Hungary's disinflation process was permanent.
The unexpected drop in inflation and a lower budget deficit planned for 2005 means the Hungarian central bank has more room for manoeuvre when setting interest rates, Draskovics said.
August's year-on-year inflation rate was 7.2% and while analysts forecast 6.9% CPI for September, it came in at 6.6%.
“A quick fall in the inflation index has started, which has now become spectacular. We expect that this will continue in the rest of the year, though not in as big steps as this, and early next year there will be substantial further steps in the decline of inflation," Draskovics said.
Analysts said the bigger than expected decline should allow the central bank to cut interest rates by up to 50-100 basis points from the current 11.00%.
The Finance Ministry calculated that next year's taxes would increase the burden of business by HUF 70 billion but at the same time tax burdens would be reduced by HUF 194.7 billion, resulting in a HUF 125 billion “surplus" for businesses.
A chart of the ministry showed that the government expected gross HUF 42 billion to be gained by the extra tax to be levied on financial institutions next year. The net “income" would be HUF 31-32 billion, ministry spokesman Ferenc Pichler told portfolio.hu.
As for the Simplified Entrepreneurial Tax (SET), Draskovics said the EU would not address the Hungarian tax regime at its 14 October meeting, and so it seems there no changes will have to be effected in SET regulations in 2005.
Draskovics said that September's CPI data underpinned the assumption that Hungary's disinflation process was permanent.
The unexpected drop in inflation and a lower budget deficit planned for 2005 means the Hungarian central bank has more room for manoeuvre when setting interest rates, Draskovics said.
August's year-on-year inflation rate was 7.2% and while analysts forecast 6.9% CPI for September, it came in at 6.6%.
“A quick fall in the inflation index has started, which has now become spectacular. We expect that this will continue in the rest of the year, though not in as big steps as this, and early next year there will be substantial further steps in the decline of inflation," Draskovics said.
Analysts said the bigger than expected decline should allow the central bank to cut interest rates by up to 50-100 basis points from the current 11.00%.
