June 29th, 2012

Matolcsy says cap on transaction tax “agreed with banks”

A HUF 6,000 per transaction cap proposed in an amendment to a bill on the new financial transactions duty had been requested by the banks, National Economy Minister Gyorgy Matolcsy said on Thursday, adding that the cap halved projected revenue from the duty.

The Hungarian Banking Association has made a commitment that no financial transaction will leave Hungary because of the duty after it was capped, he said.

Putting a limit on the tax, which will be 0.1pc of transaction value, will reduce, however, central budget revenue from the duty to HUF 140bn from HUF 280bn projected in next year’s budget bill before Parliament, the economy minister said.

They decided to extend the duty to the National Bank of Hungary and to the State Treasury in order to make up for the shortfall and more, he said.

They now expect 2013 revenue from the financial transaction duty to reach HUF 380bn on a cashflow basis, he said, [rather than HUF 280bn]. The new revenue projection included HUF 140bn collected from the financial sector and HUF 240bn collected from the NBH and the Treasury, he said.

Mr Matolcsy was speaking after discussing with the parliamentary group leaders of the governing Fidesz-KDNP an employment-boosting programme proposed by the MPs which would ease the burden of SMEs by HUF 300bn. Mr Matolcsy said the programme will be funded by HUF 100bn-HUF 100bn collected from the extension of the transaction duty to the NBH and the Treasury, and HUF 100bn “borrowed” from budget reserves which could be paid back during the year from the savings on lower than planned 2013 interest expenses.

There were no detailed consultations with the NBH governor on passing on the duty, Mr Matolcsy admitted in answer to a question, although they indicated the plan on an expert-level, and informed Ecofin members as well.

Parliament’s budget committee submitted amendments, containing the cap and the above extensions, to the bill on financial transaction duty earlier on Thursday.

  • Democrat

    “They decided to extend the duty to the National Bank of Hungary and to the State Treasury in order to make up for the shortfall” But (see previous article) he has just spent the extra so there is no catch-up.

  • Cnut

    By extending the tax to the MNB and Treasury are they effectively just cutting their budgets (and imposing additional administrative costs?)

    I’m sure that won’t have repercussions.

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