In his annual State of the Nation speech in Budapest, Prime Minister Viktor Orban announced that the exemptions would take effect in October for women with three children and in January for those with two kids. Mothers with four or more children do not pay income tax in Hungary.
Additionally, the interest rates on housing loans will be capped at 5% beginning in April, as part of steps to shore up the economy.
“We are announcing the biggest tax reduction programme in Europe,” Orban said, as quoted by Reuters.
“This will be a huge expense, but the reviving economy, the measures to support businesses and full employment combined are capable of paying for this in a way that the budget deficit and public debt both decline,” he added.
His Economy Minister Marton Nagy said the tax exemption for mothers of three comprises 250,000 people and costs the budget 170 billion forint ($441 million) every year, reported the pro-government daily Magyar Nemzet.
He added that the existing exemption for approximately 70,000 moms of four costs 50 billion Hungarian forints each year.
The Prime Minister added that his government was prepared to put price controls on rising food costs unless talks with retailers failed to keep prices under control and that he was willing to limit food retail profits as a last resort.
The inflation in the country, which reached the EU’s peak two years ago, rebounded to 5.5% in January, exceeding analysts’ expectations, with monthly price growth quickening to its strongest pace in two years as food, service, and gasoline costs all increased.
He also said that Ukraine would never join the EU if it went against Hungary’s interests, adding, “Ukraine’s entry would destroy Hungarian farmers, but not just them, the entire Hungarian economy.”
(Edited by : Sudarsanan Mani)
