Hungarian Prime Minister, Viktor Orban, has promised a tax exemption for mothers who give birth to two or three children ahead of the country’s upcoming elections set to take place in 2026.
Speaking on Saturday during the annual state of the nation address, the right wing leader said, “We are announcing the biggest tax reduction programme in Europe,” .
The policies come from what is called the Comprehensive Economic Strategy as part of which it will be possible for parents’ to deduct from their taxes and contributions 20,000 forints (approx 50 euro) after one child, 80,000 forints (approx 200 euro) after two children and 200,000 forints (approx 500 euro) after three or more children.
“That is more than a million families, he said.”
Among the proposed moves is also an interest rate cap on housing loans at 5% from April.
From October, mothers of three children are to be exempted from taxation, with exemptions for mothers of two to be phased in gradually from January next.
While acknowledging that this represents an enormous expenditure, Orban said that the economy was finally picking up and that programmes supporting businesses and full employment combined would be able to generate the monies necessary while the deficit of the budget and the sovereign debt would decrease.
He said it is an old dream that parents raising children should not be at a disadvantage financially compared with those who decide not to have children.
“I’m convinced that more children are born if mothers feel financially safe with their children. Had we not introduced the new family support system in 2010, today there would be 200,000 fewer children in Hungary,” he said.
Orban also said a breakthrough was needed in regard to housing while measures are already in place including, family housing benefit plus, village housing benefit, preferential VAT on the purchase of housing properties, and a rural home refurbishment programme.
A 5 percent interest ceiling on housing debts is to take effect from April.
Orban said that these measures would be in vain if inflation was not also brought under control, particularly in relation to food inflation where he noted price hikes among retailers for basic food items.
He recalled that the government had already introduced price curbing measures in the past, including the cap on the prices of foodstuffs, a price monitoring system and mandatory promotions, and meanwhile, they had increased wages. He observed that higher salaries were the best defence against price rises. This is true in general, but is not always enough, and not under all circumstances. Here and now, this is not enough, he stressed.
As Gript previously reported, Hungary had exempted mothers under the age of 30 from income tax.
The policy was one of several pro-family schemes implemented by the Hungarian state in recent years, as the country attempts to reverse the trend of declining demographics seen in many countries globally.
To this end the eastern European nation has offered zero percent income tax to working adults up until the age of 25, to incentivise young people to enter the workforce and prevent them from emigrating. The country also offers zero percent income tax to mothers who have four or more children, as well as offering financial supports for those buying seven-seater cars.
The offer applied regardless of whether the mother is married, single or divorced, and is said to have a goal of both boosting birth rates nationally, and providing families with a greater household income.
Gript previously asked Fine Gael Social Protection Minister Heather Humphreys about what strategies her government was putting in place to deal with this demographic decline. Her answer to that question can be viewed below.