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LMP: Corporations 'winners' of 2023 budget

Parliament passes 2023 budget

Hungary's parliament on Tuesday passed the government's draft budget for 2023, with 135 votes in favour and 54 votes against. The budget calculates with a GDP growth of 4.1 percent, a 3.5 percent-of-GDP target deficit, and 5.2 percent inflation. Finance Minister Mihaly Varga said earlier that the government had taken into consideration possibilities of a prolonged war in Ukraine and a resulting crisis.

Meanwhile, the government has pledged to use the budget to assist families, protect pensions, maintain the utility price caps, strengthen security in the country, save jobs and create new ones, as well as to keep the economy on a growth path. The government aims to maintain stability, further improve balance indicators, and maintain a disciplined fiscal policy.

According to the law passed, central budget spending will amount to 33,426 billion forints (EUR 83.9bn), while revenues will add up to 31,074 billion forints, leaving a deficit of 2,352 billion forints. It sees state debt falling to 73.8 percent of GDP by the end of next year, while the debt is expected to be 76.1 percent at the end of 2022.

Earlier funds will be replaced by two new ones, one with 670 billion forints to preserve the utility price caps, and a 842 billion forint defence fund. The two funds will be financed from windfall taxes on sectors making excessive profits in recent years.

The government has earmarked 3,230 billion forints for family assistance in 2023, 453 billion forints more than this year. A total 4,900 billion forints will be paid out in pensions, including a 13th month pension, while bonuses will increase in line with inflation.

Total defence expenditures will amount to 1,375 billion forints, while 2,670 billion forints have been allocated for health care, and 2,371 billion forints for education.

Expenditures related to EU-funded developments are expected to be 3,400 billion forints, while transfers from Brussels for those programmes are set to reach 2,000 billion. Hungary will pay a 604 billion contribution to the EU budget.

The central budget will assist local governments with 976 billion forints, 102 billion more than in 2022. The total municipal sector will use a combined budget of 4,000 billion forints.

Government welcomes approval of ‘budget of utility bill cuts, defence’

The finance ministry on Tuesday welcomed parliament’s approval of the 2023 “budget of utility bill cuts and defence”.
The budget will enable the government to strengthen Hungary’s protection, limit the impact of the “wartime energy crisis” and keep household utility prices low, the ministry said in a statement.

“We regret that the left cannot be counted on even in the current wartime situation and that they did not vote for the budget of utility protection and home defence,” the ministry added.

The statement said the protracted war in Ukraine and related European Union sanctions had led to significant price increases, soaring energy prices and high inflation throughout Europe. The government’s top priority is to keep Hungary out of the war and to protect Hungarians from being made to pay the price of the war, it said. The government’s most important task right now is to preserve Hungary’s peace and security, ensure the security of its energy supply and protect the caps on household utility bills, the ministry said.

That is why, it noted, next year’s budget contains a utility protection fund and a defence fund whose combined expenditures will exceed 1,500 billion forints (EUR 3.7bn) which will be financed by the taxes on excessive profits and other revenues.

The 2023 budget guarantees the continuation of the government’s family support measures and the 13th month pension, as well as pension increases pegged to inflation, the ministry said.

LMP: Corporations ‘winners’ of 2023 budget

Opposition LMP on Tuesday slammed the draft budget, saying it favoured multinational corporations and failed to address the “towering problems” of the energy and food crises, inflation and the climate crisis.

Deputy group leader Antal Csardi told a press conference ahead of the vote on the budget in parliament that low earners and middle-class citizens will suffer most under the 2023 budget.

Noting over 100 amendment proposals of LMP had been “swept unread off the table”, Csardi said LMP wanted to raise the taxes of “tax-avoiding multinationals”. The draft budget calculates with 7,100 billion forints (EUR 17.7bn) in VAT revenues and 4,000 billion in PIT revenues, but only 800 billion in corporate taxes, he said.

The ruling parties have also failed to support LMP’s proposal of an inflation-linked raise for public employees and a raise for teachers, he said. He also called for “real utility price cuts” by insulation programmes for residential buildings and tax cuts for sustainable energy resources.

Socialists slam 2023 ‘budget of uncertainty’

The opposition Socialist Party has slammed the government’s 2023 budget passed by lawmakers on Tuesday, calling it “a budget of uncertainty and pillage”. Bertalan Toth, the party’s co-leader, told a press conference that the last three months had proved that ruling Fidesz “has deceived its voters”.

The Socialists had submitted multiple amendment proposals to the draft budget, he said, noting that his party has called for more funding for health care and higher wages for hospital workers and teachers. The Socialist parliamentary group had also pushed to exempt local councils from having to pay market utility prices and called for pension increases, he added.

Since Fidesz had rejected these proposals, the Socialists did not support with their votes next year’s budget which Toth said would threaten the livelihoods of millions.

Zoltan Vajda, the (Socialist) head of parliament’s budgetary committee, said the budget contained “dire austerity measures”, arguing that the taxes on excessive profits would be passed on to customers, the changes to the itemised tax for small businesses (kata) were actually a tax increase, and the caps on household utility bills “have basically been gutted”.

He said the 5.2 percent inflation rate, the 4 percent GDP growth rate and the euro exchange rate of 375-377 forints per euro envisaged in the budget were “already unrealistic”.

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