Page 25 - Central & Southeast Outlook 2020

Such consolidation would reverse the pro-cyclical fiscal stance of the past few years and allow monetary policy to remain accommodative for a longer period, helping preserve Hungary's competitiveness, the International Monetary Fund (IMF) noted.
The 2020 budget entails a number of tax cuts. The small business tax rate will drop from 13% to 12% for 40,000 small businesses. Slashing social contribution tax from 19.5% to 17.5% will lead to a saving of HUF310bn for employers in 2020. The VAT for commercial accommodation will be reduced from 18% to 5%.
Hungary, with the highest VAT rate in Europe at 27%, has struggled with high tax evasion, but tax cuts and whitening measures have reduced the share of the illegal economy.
New measures to whiten the economy will further improve the budget balance in 2020.
The tax office plans to expand the use of online invoicing to more sectors. In the long-run, all transactions will be connected to the tax office online. The move is seen as a further step for clamping down on VAT fraud.
3.4 ​Budget - Latvia
The Latvian parliament passed the state budget bill for 2020 in mid-October. The bill pencils in a number of increases in welfare payouts as well as increases in pay for public sector employees such as health care workers and teachers.
The bill assumes a deficit of 0.3% of GDP and economic growth at 2.8%. The bill also states that the consolidated budget revenue will come in at €9.9bn next year, an increase of 7.6% versus the 2019 budget bill. Consolidated budget expenditure will amount to €10bn, a growth of 6.4%.
“The first priority, with the largest additional funding of €50mn, is the health sector. This is followed by the education system, with an additional €23mn for teachers' salaries. An additional €18.9mn for the interior sector and an additional €13mn for salaries of cultural workers, which have not been increased for years,” Prime Minister Krisjanis Karins said about the budget in a statement.
The Riga government also plans an increase in the minimum wage to €500 a month towards the end of 2020. Non-taxable income will increase as well. There will also be increases in state social guarantees, benefits for the disabled, the minimum retirement pension, and in other welfare payouts.
25​ CESE Outlook 2020​ ​ ​www.intellinews.com