No further cut to Hungary's social contribution tax next year - Gulyás

When the 13th month pension was first introduced, the draft plan included a year-by-year breakdown of the implementation process. However, the only information available about the current 14th month pension is that the intention is to reach the full monthly amount by 2030.

So, while this is not the objective, it is possible that the full 14th-month pension will be achieved in five years rather than four.

The tax law is currently before Parliament.

There will be no further reductions to the social contribution tax next year,

as this is not included in the tax package.

 Gergely Gulyás provided this clarification in response to a question raised during negotiations on raising the minimum wage. This is another development in the ongoing three-month-long social contribution tax issue. First, Economy Minister Márton Nagy spoke about the demand from business interest groups for the current 13% social contribution tax rate to be reduced. However, it has recently become apparent that the prospect of reducing the social contribution tax and the likelihood of this occurring have diminished. The impact of this on the budget balance exceeds HUF 200 billion, which cannot be accommodated in the current budget situation. Based on current indications from Gergely Gulyás, it now appears that the social contribution tax reduction has been taken off the agenda. Meanwhile, the government adopted a tax relief package for SMEs, which parliament voted on. This package did not include a reduction in social contribution tax and had an impact on the budget of HUF 80 billion.

From December, Hungarian energy group Mol will increase its oil exports to Serbia by 2.5 times. However, according to Gulyás, this will not jeopardise supply security.

Gulyás was asked if the government has a plan in place to ensure that the bank tax increase [most likely the raise to the windfall tax - ed.] does not result in higher costs for customers.? He replied that there is healthy competition in the banking system with a large number of players. He added that there is also a competition authority that monitors whether banks are raising fees in a cartel-like manner in order to pass on the burden of the bank tax.

He emphasised that the competition authority is an agency independent of the government.

"There is no proposal before the government that would change the regulations," said Gulyás, after Interior Minister Sándor Pintér spoke at a committee hearing about banning the mention of drugs in "certain works".

Gulyás said that the issue is not about being unable to discuss a social phenomenon; rather, in their view, those who deal drugs are killing people. The minister explained that the Hungarian government wants to take decisive action against drugs, but there is no such proposal. "I agree with the minister that drug use and promotion are prohibited," he said.

In a not overly coherent remark Pintér said the following in a hearing by the parliament's cultural committee on Tuesday:

"We will also address advertising. Soon, new laws will be introduced or regulations at various levels of advertising to prohibit it, and we will even prohibit its appearance in certain works, not within the framework of the Criminal Code for the time being, but we have other ideas, which will soon be made known."

It has not become any clearer what exactly they plan to ban and how. Nor is it clear what kind of literary or musical works are involved, or what exactly constitutes "advertising" drugs.

"I would not stop the government from engaging in self-criticism, but we should also ask what we have achieved," said Gulyás regarding Hungary's population falling below 9.5 million. He went on to say that if the 2008–2009 demographic trend had continued, Hungary would be in a worse position now.

He believes that we must confront the problems, but he added that "we can be proud of the fact that 200,000 more children were born thanks to the Hungarian family support system."

Gulyás said that, in his opinion, the European peace plan is "not realistic at all" and should not replace the American one. We must accept that our role in the peace process will be minimal.

In response to a question, Gergely Gulyás said that, for the time being, the US protective shield will cost nothing. He emphasised that two things are important: the government will not give up any of its objectives, despite the fact that economic growth is lagging behind expectations.

The financial protective shield is a guarantee, he emphasised.

It also sends a message to the markets that the US government can provide a guarantee if necessary.

According to data provided by Eszter Vitályos, they have already disbursed HUF 132.5 billion in 34,310 transactions through the workers' loan programme, with an average loan amount of HUF 3.86 million.

Forty percent of Home Start applications come from Budapest and Pest County. Although interest in the programme is fairly evenly distributed geographically, there is a slight bias towards larger cities due to the fact that there are more new homes in cities. He said that 33,000–34,000 people have applied for workers' loan so far.

According to the government's interpretation, the capital did not win in court because the court questioned the legitimacy of the solidarity contribution; rather, it won because the court ruled on a procedural matter.

The treasury's 30-year practice of deducting the solidarity tax obligation from the normative payments to be made by the state must be subject to substantive legal remedy.

In response to a question, the minister confirmed that the government is complying with this court ruling. Accordingly, the government will amend the legislation, meaning that, in practice, the state treasury will pay the normative amount and collect the solidarity contribution separately, rather than making a net payment.

Tibor Navracsics, the Minister for Regional Development, is negotiating the contribution, a process that Gergely Gulyás considers to be both correct and justified. Gulyás also previously expressed his view that the method used to calculate the tax is unfair.

Regarding the possibility of a peace summit in Budapest, he said that what matters is peace itself, not where the agreement is signed.

Regarding Gergely Karácsony's requests for the government to transfer public transport funds and to stop collecting debt from the capital, Gergely Gulyás said that they are now waiting for the General Assembly's statement on their solvency. In his opinion, the mayor's requests may not necessarily resolve Budapest's financial issues, given that the capital city has other debts to the government.

On Tuesday, the mayor wrote: "The bottom line is that they should pay the capital city the 8.8 billion forints that we advanced to the government from EU funds for the purchase of trolleybuses, pay the 12 billion forints required by law to finance public transport, and stop the collections that the Supreme Court has ruled to be illegal. That would be all the help we need."

Gergely Gulyás neither confirmed nor denied press reports that Viktor Orbán would be travelling to Moscow on Friday. He said that the public would be informed about the Prime Minister's foreign trips in the usual way.

According to Gergely Gulyás, the programme's success is evident from the high level of interest, with 4 out of 10 home purchases now linked to the Home Start Programme, which offers mortgages at a 3% interest rate. He said that we are no longer just talking about loan applicants, but about loans that have actually been taken out. Forty-four percent of applicants are married.

The programme's momentum may be maintained by the fact that, as of 1 January, Home Start will also be available for properties in outlying areas. This is expected to increase the housing supply by several thousand.

Given that the price increase seen in recent years has halved in the last month, he believes it cannot be said that the programme is causing prices to rise.

'It is crucial that the European Union supports American peace efforts,' the minister said. In connection with the current peace initiatives, the minister said that it is in Europe's interest to ensure that adequate security guarantees are in place to prevent another war from breaking out.

Next year, the government will be able to pay the first quarter of the 14th-month pension.

In line with the Council for the Elderly's recommendation, the state will pay it out in February alongside the 13th-month pension, Gergely Gulyás announced.

He noted that next year's pension increase of 3.6% is in line with the budget's inflation forecast. However, the government expects inflation to be lower than this next year, meaning that pensioners may be better off and compensation is not expected to be necessary.

Yesterday, the government held talks with the capital city. They are waiting for the General Assembly to officially declare insolvency, after which the government would be willing to provide assistance and bankruptcy protection. The aim is to ensure that Budapest's potential insolvency does not render the city unable to function.