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World News

Factbox - What we know about incoming Hungary government plans

(Reuters) - Centre-right Fidesz party is expected to form Hungary’s new government by the end of this month after it won elections in April.

Following are Fidesz’ policy plans made public so far:

TAX PLANS

* Tax cuts worth at least 1,500-2,000 billion Hungarian forints (4.7 - 6.2 billion pounds) in the next three years starting from July 1, 2010 as part of plans to simulate growth and investment, which also includes state support to domestic businesses.

* Family tax as of January 1, 2011 as part of a three-year tax reform programme which economy minister designate Gyorgy Matolcsy has said would amount to a “tax revolution.”

* Simplification of the tax system

* No reduction in top 25 percent value added tax rate

* Shifting tax burden from incomes to consumption

* No wealth tax planned

COST SAVINGS PLAN

* To save about 800 billion forints by reducing bureaucracy over the next four years. No layoffs in public sector this year.

* To reduce the size of parliament from 2014, and halve the number of representatives on local councils this year

FX LOANS

* Conversion of foreign exchange loans: govt government to establish a state-backed fund allowing troubled household borrowers to convert their foreign currency mortgages into forints to reduce risks from market volatility.

Costs of conversion should be shared among the state, the banks and the borrowers.

BUDGET DEFICIT

* Plans to agree with the IMF and EU on a budget deficit of 5-6 percent of GDP this year, higher than the outgoing Socialist government’s 3.8 percent target. No detail on next year’s budget but plans to cut the deficit by 0.5-1 percentage point of GDP per year in the coming years.

* Multi-year plan to reduce debt (no details available)

EURO

* No rush to adopt the euro, as the euro zone struggles with grave problems

CENTRAL BANK

* Puts pressure on central bank, says it had made serious policy mistakes over past years and Governor Andras Simor, and also the Monetary Council members should resign.

Matolcsy also said the heads of the financial regulator PSZAF and the tax authority should also resign.

Reporting by Krisztina Than; Editing by Maria Golovnina

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