Hungarian Parliament passes 2pps social contribution cut for 2019

The parliament approved the reduction of the social contribution by 2pps, from 19.5% to 17.5%, for 2019, the state news agency MTI reported. The reduction was part of the budget for 2019 as well as the government’s recent economic protection programme and was agreed on the tripartite negotiations in late 2018. It will enter in effect as of Jul 1, 2020 rather than the beginning of the year. The cut was passed at an expedited procedure in the parliament and was supported by 160 votes in favour, one against and 5 abstentions.

According to the tripartite agreement, the social contribution should be cut by 2pps each year in the next four years starting from 2019. The reductions will be generally timed from the start of Q2 of each year but are conditioned on wage growth of above 6% in Q1. The social contribution cut for 2019 will, however, enter in effect as of Jul 1, according to the 2019 budget. The cut for this year will cost HUF144bn to the budget in 2019 and HUF156bn in 2020, finance minister Mihaly Varga had earlier said.

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