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After Viktor Orbán consulted with key economic players and members of the government on Monday morning, the first set of proposals from the government and action group for economic recovery were received. Indeed, the Hungarian Chamber of Commerce and Industry has compiled its second crisis package, which includes four immediate measures: the establishment of a National Crisis Management Fund (Nemzeti Válságkezelési Alap); ensure job retention and tackle developed unemployment immediately; priority support for the business community; solidarity measures to safeguard the public good. Those who have become unemployed due to the crisis, retirees, health and education workers and families with children can receive additional support. The National Crisis Management Fund can be worth between 2000 and 4000 billion Fiorini, its purpose is to provide the economy’s motor enterprises with a “temporary respirator”, but not in the form of free support / money or a loan, but in the form of an investment. That is, the Crisis Management Fund becomes the owner of the aided companies.

 

MKIK has put a complex set of suggestions on the table

The Hungarian Chamber of Commerce and Industry on Monday announced another complex economic stabilization package, the Chamber revealed in a briefing to Portfolio.

In order to achieve an in-depth understanding of the problems that have developed, the Chamber (MKIK) has decided to set up sectoral working groups (trade, logistics, food products, industry, tourism, finance). “The main task of the working groups is to identify the problems affecting the sector and to present possible proposals to the members of the institution of economic crises set up by MKIK.

BASED ON THE FOLLOWING, IT IS POSSIBLE THAT THESE PROPOSALS MAKE PART OF THE GOVERNMENT ACTION PLAN OF WHICH THE ANNOUNCEMENT IS SCHEDULED FOR APRIL 6 OR 7

“We continue to maintain our position that the current crisis situation is not comparable to the 2008 financial crisis and therefore requires a different set of instruments for which we presented our first round of immediate proposals to the government on March 17, 2020” said the Chamber.

“We believe it is important to reiterate that we consider the principles of forced solidarity and asymmetric sharing as the key to facing the current situation, as long as the economic situation requires it.

All of this involves the joint intervention of a three-actor model, which means that in addition to the domination of public involvement, both companies (employers) and people (employees) must do their part, “they argue.

According to the Chamber, the new Coronavirus epidemic is a global human, physical and economic crisis. This implies that it is not enough to focus exclusively on managing the economic crisis, but rather it is clear that at the moment the human, physical factor has priority.

Given the complexity of the situation, the Chamber proposes an offensive approach to economic policy.

“The most important task in the current situation is the conservation of work. In the current situation, not only the most evident sectors (tourism, catering, etc.) but also the new ones have stopped. First of all, those strictly connected to the sectors that immediately collapsed.

And then, those who suffer a significant drop in sales due to the restrictions imposed by the reduction of personal contact.

 

Immediate steps (from March 2020 until the end of the restrictions)

The House’s second “crisis package” classified immediate measures into 4 groups:

  1. Legislative preparation of the National Crisis Management Fund
  2. Ensure job retention and tackle unemployment immediately
  3. Special support for the business community
  4. Solidarity measures in the public interest

 

  1. The creation of a legislative environment for the functioning of the National Crisis Management Fund should be started immediately.
  • All this to make it operational by 2021.

 

  1. In order to ensure job retention and tackle unemployment immediately, the organization recommends the following steps:
  • Introduction of a non-refundable state subsidy, which can take the form of non-payment of contributions deducted by employees, in the following structure: The employer deducts at least 15% of the personal income tax from employees, which could be withheld by the employer as a subsidy. If an employer deducts all contributions from the employee, this amounts to 33.5%. At the same time, we note that this can be achieved by using a three-actor model, that is, by involving the state, the employer and the employee together. In our view, all interested parties should collectively take their share.
  • The state could provide a loan in proportion to the wages paid, with a repayment term of 2021 and / or 2022. Previously, there was similar support for the so-called development tax credit provided through the tax system, therefore you already have experience in providing and repaying the loan.
  • However, due to the different tax options, there are some who have been excluded from this advantage. Taxpayers who have chosen KIVA do not pay social security tax. We recommend reducing the KIVA rate from 12% to 9% in these sectors, similar to the social security tax.
  • Suspension of the payment of the tax advance on annual taxes (corporate tax, KIVA).
  • Upon request, the option to postpone the deadline for filing annual tax returns (corporation tax, KIVA, Robin Hood tax, innovation tax, local business tax) and annual report 60 days after the deadline should be provided .
  • Szocho discount for all companies up to 50,000 Florins per employee, but up to 12.5 million Florins per company only for those who continue to work and not for new entrants after 04.01. The advantage is limited to a limited number of sectors.
  • An employee can also receive direct support if he agrees with his employer to take leave early and then stay home with a fixed percentage of his salary. For example, this rate could be a 60% wage, to which the state provides a 20% surcharge, and therefore the worker has a 20% reduction in income. In the short term, this is the most effective way to convince people to stay at home and, in the long term, it will have some flexibility in terms of money needs and will be gradually removed as the situation improves.

 

  1. Regarding the circle of entrepreneurs:
  • Industries and manufacturing companies are not equally affected by the crisis, so the measures for their support cannot be the same! It is necessary to evaluate which sectors and companies will grow and which will not, and it is also necessary to evaluate whether the difficulties they are facing will be resolved with the end of the crisis or if they are caused by their own internal weaknesses. Among them, priority should be given on the basis of their contribution to GDP, employment, exports and innovation. It is necessary to review and support those industries and companies capable of performing digital transformations. In our view, priority should be given to Hungarian small and medium-sized enterprises
  • In the current crisis, we must help small and medium-sized enterprises that have thrived for years, we hope to cope with this shock because they have markets and orders. The credit moratorium is temporarily reducing current costs, but apparently new loans are already frozen and do not have sufficient liquidity. This could be solved by extending the central bank’s fixed rate lending mechanism to working capital loans, for which credit guarantee institutions also have an active product.
  • With the help of credit guarantee institutions, factoring options (advance payment of deliveries) can also increase liquidity. At the moment they would be very important for retail suppliers (food chains, pharmacies, etc.), but also for health and education workers, as they would get their money immediately instead of the usual 30-45 days. All large banks have factorial activity with a significant IT background, factor frameworks can be created quickly and therefore risk-free for banks and provide companies with immediate liquidity.

 

  1. Solidarity measures of public interest:
  • All those who have become unemployed after March 1, 2020 should receive financial support.
  • Each pensioner should receive a voucher (for example 15,000 Forints) to spend on food, to pay bills or on the ICT account.
  • All families with children should receive a fixed amount of support for each child (for example 10,000 Forints).
  • All health and education stakeholders (educators, doctors, nurses) should receive additional compensation in recognition of their performance in the situation.
  • We recommend that Internet coverage nationwide is free