Incentive Elements of Household Savings in the Hungarian Tax System

Abstract

Of the regulatory systems, the tax system is one of the most important instruments for the government to encourage savings. Although tax systems are relatively stable, in fact, they are constantly changing. Taxes and their rates, as well as changes in other factors, serve to implement different tax policies. The primary purpose of the tax system is to redistribute income and enforce fairness to achieve effective results. Changes in tax laws can influence long-term savings decisions either positively or negatively.

I analized the incentive elements of household savings in the Hungarian tax system which applicable today and the discounts that could be used in the past. I collected other discounts which has contact with tax system and helps long term savings.

The Hungarian state offers three possibilities of self-help for pension purposes in the personal income tax system, which are voluntary pension fund, retirement savings account and pension insurance. I compared these possibilities and analized by different point of views. Furthermore, they support health insurance and mutual funds, from 2014 onwards the government merged the discounts. In my opinion, governments play an important role in creating economic prosperity in countries.