According to some sources from the Hungarian Prime Minister’s Office, a lifelong personal income tax exemption is planned to be applied to mothers with at least three children. With this tax cut, the Hungarian Government would intend to encourage families to have more children, and to increase the fertility rate in Hungary, which is one of the lowest in Europe. This measure could result in approximately HUF 100 billion (~EUR 285 million) loss of revenue for the Government budget, which is 5% of the total personal income tax revenue. On the other hand, it is difficult to estimate how this tax exemption will affect the fertility rate or the women re-entering the labour market.
This tax benefit would affect every woman who is raising or raised three or more children, and it would complement the existing tax benefits. The number of the women in question is around 173,000. A woman with an average income, returning to the job market at age 39 and having 3 children could save HUF 18 million (~EUR 55.000) until retirement. It is estimated that due to the tax cut the income position of the affected women could increase by 11% annually.
By Gabriella Galik, Partner, KCG Partners Law Firm
