Hungary FTT revenues behind schedule in March budget

Budget history in March

According to the Economy Ministry’s detailed budget numbers disclosed on Monday afternoon, Hungary posted a HUF 154.1 bn gap in the third month of the year, which is smaller than in the previous years. The last time the budget shortfall came in a level this low in March was in 2005.

The HUF 154 bn gap was the result of a HUF 137.5 deficit at the central state budget, a HUF 17.2 bn shortfall at extra-budgetary funds and a HUF 0.6 bn surplus at social security funds.

Regarding the monthly deficit figures the ministry underlined that due to the changes implemented to the tax regime (revenue targets for certain levies were lowered, some taxes were abolished or modified and new taxes were introduced) comparison of the third-month figures for 2012 and 2013 is not possible without the adjustment for the distortive impacts of these factors.

Let’s see the details!

Budget revenues grew by HUF 223 bn year on year in March 2013 thank to the following factors:

Payments by economic operators grew HUF 12 bn to HUF 103 bn. Within this category, corporate income tax revenues dropped HUF 1.3 bn yr/yr. CIT revenues declined by HUF 2.4 bn (9.2%) and refunds went down HUF 1.2 bn (42.8%) compared to March 2012. Revenues from the mining feetotalled HUF 5.5 bn, down from HUF 10.1 bn a year earlier. The decrease came about primarily due to the price cap on natural gas, the drop in the price of crude on the world market and the 10% reduction to retail energy tariffs. The gaming tax also generated much smaller revenues for the budget than in March 2012. The bank tax brought in HUF 36 bn worth of revenues, down HUF 6 bn yr/yr. The public utility infrastructure tax generated HUF 23 bn for state coffers.

- Consumption taxes totalled HUF 240 bn, double the March 2012 sum, as VAT revenues jumped to HUF 166 bn from HUF 63 bn. (The increase was related to a change in the deadline for refunds, which totalled HUF 144.7 bn in March this year, down HUF 113.3 bn yr/yr). The telecom tax generated HUF 3.7 bn revenues and the financial transaction tax brought in HUF 14.1 bn in March

- Payments by households amounted to HUF 117 bn in March this year vs. HUF 103 bn a year earlier. Within this personal income tax revenues grew in annual terms.

- Central state budget revenues reached HUF 145.2 bn in March, up 36.2% yr/yr. Chapter managed appropriations revenues were HUF 106.3 bn, 142.5% of the revenues achieved a year earlier.

General government expenditures rose HUF 125 bn yr/yr in March.

Q1 balance

The January-March deficit totalled HUF 493.6 billion, which is nominally the smallest figure of the past few years - and badly needed at that.

The third modification of the 2013 budget has already affected the cornerstone figures. The full-year deficit target as of April is HUF 881 bn (on a cash flow basis, excluding local governments). 56% of that goal was reached by the of March (and 59% of the original target).


The Q1 data tell us which tax revenue targets are greatly undershot and which came in higher than expected.

- the income tax on energy service providers generated HUF 1 billion revenues by end-March, whereas the full-year target is HUF 80 bn. Although the revenue figure is nominally the same as last year, compared to the 2013 goal there is a great backlog here.

- the mining fee brought state coffers HUF 18 bn (down HUF 15 bn yr/yr), which corresponds to 19.5% of the full-year target and 32% of what should have been collected by now assuming an even distribution of the revenues throughout the year.

- the gaming tax placed HUF 7.8 bn into the budget in the first quarter, HUF 9 bn less than in the same period of 2012. By the end of March, revenues from this levy corresponded to 19.5% of the time-proportionately justified figure vs. 31.5% a year earlier.

- VAT revenues in Q1 were not much different than last year by this time as regards the distribution throughout the year.

- the HUF 27.5 bn FTT revenues in Q1 corresponds to 9.1% of the full-year target. By the end of March revenues should have been up at HUF 54 bn already, which means only half of the target was collected by the end of the third month. The first FTT payment was due in February and the cabinet pencilled in HUF 301 bn on a cash flow basis. The ministry, however, did not say whether financial institutions or the State Treasury are behind schedule in payments.

• Tags:
• deficit,
• economy,
• budget,
• general government,
• excessive deficit procedure