In the latest instalment of The Bold Truth About Hungary podcast, Finance Minister Mihaly Varga spoke about economic policy goals with State Secretary Zoltán Kovács.
Addressing tax policy, Minister Varga said the government’s approach is not to roll out new taxes, but to broaden the tax base by reducing tax avoidance. If there are more taxpayers, they have to pay less, he added. “Paradoxically, we have been able to prove that a lower tax rate contributes to higher state revenue, while the economy has become more competitive as we could expand the system for state support and assistance,” he said. Minister Varga acknowledged that 2023 will be the “most dangerous year” for Hungary since the change of system, which will require “a reduction of risks and a buildup of reserves”. The government aims to create a “secure environment”, in terms of finance, too, by protecting jobs, preserving the real value of pensions and maintaining the regulated price system for household utilities, he said. He noted that foreign direct investment has reached record levels in recent years, even as taxation relative to GDP has been reduced on an unprecedented scale. A look back at the past 13 years shows Hungary’s economic model has “yielded success”, he said. While the country was “on the edge of default” in 2010, the economy grew at the fastest pace in the European Union in 2019, he added. Varga said Hungary’s government is “proactive” and “doesn’t just walk up and down the pitch like a referee” but shapes the match as “one of the players”. He said the matter of demographics is “the most important issue” for Hungary, adding that if depopulation continues for 10-20 years, the economy will face “serious damage, difficult to repair”. Varga called out decision-makers in Brussels for “holding back” the country’s EU funding and putting Hungary at a competitive disadvantage.
Watch the full episode of The Bold Truth About Hungary: