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Apr 20, 2016

Lower taxes and higher support housing means more money to remain with families next year

“The budget for home construction is expected to double to 211 billion forints next year, while 869.4 billion forints, an added 4 percent, could be available for family financial support,” said Minister of State for Family and Youth Affairs Katalin Novak.

At a press conference in Budapest to announce planned changes to next year’s budget that will affect families, the minister of state announced that the planned figures for the 2017 budget are already available and the legislative act is expected to be passed by Parliament during its spring session. The year 2017 will be one of tax cuts and housing schemes, in addition to which major wage settlement programs are also expected to be launched next year, she said.

Minister of State Novák drew attention to the fact that Hungary spends substantially more on supporting families than the OECD average. While the latter spend an average of 2.4 percent of their GDP on families, this ratio reached 4 percent in Hungary last year and will be increasing further during the upcoming years, she said.

The minister of state declared that the Hungarian government’s family-centered, family-friendly policies would also be mirrored in the 2017 budget.

According to Ms. Novák, financial support for families has increased significantly in recent years, by a total of 260.9 billion forints (840 million EUR), a rise of 43 percent compared to 2010.

Next year, social security-based benefits such as the infant care benefit, child care benefit and child nursing benefit are expected to increase by 34 percent compared to 2010, she said, adding that plans for the 2017 budget include an 8 percent increase compared to last year in this field.

Among other positive changes concerning families, she also mentioned the planned decrease in VAT on basic foodstuffs and the expansion of tax benefits for families with two children. The latter will be 30 thousand forints per month and the government’s target is a further increase to 40 thousand forints by 2019. Tax benefits for families with two children affect 350 thousand families in Hungary, she said.

According to the draft budget, family tax benefits are expected to increase by 8 percent, a total of 277 billion forints (EUR 890M) in 2017.

Minister of State Novák also told the press that the government will be continuing its housing program, the largest in decades, one of the most important elements of which is the family home purchase subsidy program (CSOK).

Under the program, families may receive non-refundable state financing of between 600 thousand and 10 million forints toward constructing or purchasing a new or refurbished home, in addition to which families with three or more children may also be eligible to receive a state-subsidised, low-interest loan of 10 million forints, she explained.

According to Ms. Novák, the program’s planned budget will increase to 211 billion forints (680 million EUR) next year and under certain conditions families who are building a new home will again have the opportunity to receive a VAT refund, in addition to which the program will also be supplemented with a new element, the so-called national home-creation communities.

The planned budget is open-ended, Ms. Novák added, meaning that the funding available may be increased in accordance with demand.

The minister of state said she hoped more and more people felt it was worth having and raising children in Hungary thanks to the family-friendly budget.