Hungary to punish banks and ban home loans in foreign currencies

HUNGARY’S Prime Minister vowed to introduce a flat income tax and a tariff on banks, cut public pay and ban foreign currency mortgages as he strove to reassure investors he could contain the budget deficit.

After sweeping an April election with a two-thirds majority, Viktor Orban unveiled a programme departing from that of the previous caretaker socialist cabinet that cut spending last year after narrowly avoiding economic meltdown in 2008.

Despite warnings his centre-right Fidesz party’s pro-growth strategy could undermine Hungary’s pledges to cut its budget deficit under a €20bn (£16.6bn) international aid package, Orban said boosting jobs and output were key to economic recovery.

Struggling to win back market confidence after Fidesz officials rattled investors by warning of a Greek-style debt crisis last week, Orban said he would enact a flat 16 per cent income tax over two years, effectively cutting the rate. He said his government would cut taxes to small and medium firms and ban foreign currency mortgage lending. Those loans have been a crucial driver of Hungary’s economy.