Hungary unveils third austerity package in six weeks

Hungary's government approved its third austerity package in six weeks on Friday, set at 90 billion forints (316.3 million euros). The package includes the cementing of a bank tax and an increase in taxes on energy companies, according to a statement on the economy ministry website. Prime Minister Viktor Orban said earlier on Friday that the latest measures will mean the deficit will reach only 2.7 percent of gross domestic product in 2013. The banking sector tax was introduced in 2010 as a temporary revenue-based "crisis tax" but will now be made permanent at its 2013 level. A 30 percent tax on energy providers will be raised to 50 percent from 2013, which the government forecasts it will bring in 40 billion forints for the central budget next year. Another 30 billion forints is expected to be generated from a new tax on public utilities, charged per cable metre, and payable for water, sewage, natural gas, heat, power and telecommunications services. The government also plans to bring in three corporate tax rates: 10, 19 and 50 percent. On October 5, Economy Minister Gyorgy Matolcsy announced a 397 billion forints set of measures, and a 367 billion forints package on October 17. The series of austerity measures are aimed at keeping Hungary's budget deficit under 3.0 percent, thereby avoiding losing access to vital EU cohesion funds. According to the European Commission's autumn economic forecasts released last week, Hungary's deficit will reach 2.5 percent of GDP in 2012, 2.9 percent in 2013, and 3.5 percent in 2014.