The Prime Minister said the future of the country depends on whether the people want to work, and if the government takes the money they worked for away from them, they will not work. The people must be allowed, in fact, encouraged to perform well; this benefits them – because they, too, want to live well – and also the country, he said, stressing that therefore, low taxes are the best economic policy.
Mr Orbán observed that the best income tax rate was zero which – regrettably – Hungary could not afford for the time being. However, some groups which are especially valuable for Hungary, such as families and mothers, are eligible for benefits, all the way down to the zero rate.
Regarding the fixed three per cent business credit facility announced on Saturday and the family support measures announced this year to date, including the Home Start Programme and the tax exemption for mothers, the Prime Minister said this year’s budget and also next year’s include the funds necessary for these measures. He took the view: “if money is spent on welfare or social expenditures, we must very much keep our wits about us,” however, when grants are provided for the economy, there is a lesser risk. We should leave as much money in the economy as we can, this boosts its performance, he stressed.
In the context of the raising of the minimum wage, he said they are currently negotiating about wages for next year; trade unions and employers told the government that in order to reach an agreement on a double-digit minimum wage increase, the government must reduce the taxes currently encumbering private businesses.
In answer to the question of whether there will be a double-digit minimum wage increase if the social contribution tax is reduced, Mr Orbán said “this sounds brutal, but this is the situation more or less.” There will be a tax cut of some kind, he indicated.
Regarding the simplified tax of individual entrepreneurs and small businesses [kata], the Prime Minister recalled that when this form of taxation was first invented, it worked well. However, they started extending it, and something went wrong. “There were so many abuses, I can’t tell you,” he said, adding that there was a lot of tax fraud, wheeling and dealing in the grey zone which had to be tidied up, and this then turned into “a political hoo-ha.”
At the same time, he indicated that they were negotiating about how to open up or extend this form of taxation which allowed more freedom in billing, but that they requested guarantees from the chamber to avoid repeated abuses in the future.
In answer to a question about the reduction of VAT, the Prime Minister said for the time being, they see no scope for reducing the VAT on products other than those already removed from under the 27 per cent tax rate, and if there was more money in the Hungarian economy than there is now, he would continue to support income tax reductions serving to support families.
Mr Orbán said, in his view, it is a suicidal policy if a country seeks to build its economic growth on consumption; economic growth must be built on technology, investments, developments and work. Consumption should be such that the people should feel comfortable in their own country and should be able to afford everything they need; consumption should not be regarded as a special economic tool, he pointed out.
Regarding his promise that 2025 will be a year of breakthrough and Hungary will get off to a flying start, the Prime Minister said this has happened, except not in January, but on 1 July. He stressed that the fixed 3 per cent credit facility for businesses, the fixed 3 per cent first home-buying credit programme, the raising of the family tax benefit by 50 per cent, the tax exemption of mothers with three children, and the tax exemption of the infant and child care benefits were all part of the flying start. These programmes – regardless of the positive nature of macro-economic figures – all represent a breakthrough.
In the context of macro-economic data, he said as prime minister he is expected to ensure that everyone has their own home, everyone’s wages and pensions increase, “the majority of people don’t really care about the rest.” If these needs and demands are not met, that leads to economic and social instability, followed by chaos, he warned. He said he guarantees that everyone will have homes of their own, wages will be increased and the pension system, too, is safe.
Regarding fiscal policy, Mr Orbán said “there is no Hungarian opposition party, certainly not on the Left, that doesn’t stand for Brussels’ interests.” He described the Tisza Party as “a Brussels project,” pointing out that as Brussels expects tax increases, Tisza “will implement this” if the Hungarian people consent to this.
Mr Orbán also stated that the government had no specific exchange rate target. He indicated, however, that they “wouldn’t be required to figure out” ever further governmental interest compensation schemes if the central bank led by Mihály Varga reduced the prime rate because then businesses would have access to cheap credit also on the market. At the same time, the Prime Minister praised the caution of the governor of the National Bank of Hungary and his efforts made with a view to the stability of the forint.
The Prime Minister said in answer to a question relating to the introduction of the euro that “that’s most certainly not on my table.” In his view, at present, the EU is in a phase of disintegration, “it’s in the process of falling apart,” and therefore, he would not like to tie Hungary’s fate to that of the EU any more closely. The euro would do just that, Mr Orbán laid down, stressing that unless radical changes are implemented, the EU will remain a mere passing phase in our lives.
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