State supports and benefits that influence the population's saving decisions

Our main goal is to show that taxation of state supports and benefits influences the population's saving decisions. It is primarily in the interests of individuals, but also in the interests of the state that the financial decision making behavior of individuals reflects a culture of financial literacy, so that individuals become aware of their potential and make use of financial opportunities. The state can then achieve real results, such as increased savings, through supports if it is effective. It is not the supporting of aid itself, but the achievement that is the main task. The role of savings has always been an important area in economics and economic analyses, and it remains an important factor even today. A considerable number of Hungarian households have no savings; they tend to have loans instead, the installments of which represent a high proportion expressed as a percentage of households’ net income. This problem is often traced back to inadequate financial literacy. There are two main hindering factors for using state tax incentives and support related to residential savings: the knowledge and confidence of individuals.

The aim of this research is the followings: mapping the Hungarian state's role between 2005 and 2015 (taxes, tax incentives, support mechanisms), getting to know the "best practice practices" of other countries (such as the United Kingdom and Germany), and examining the extent to which international experience can be adapted to the Hungarian financial institutional system, as well as how much attention can be given to the domestic population. Using Hungarian Central Statistics Office and the Hungarian National Tax Customs Administration data, we examine the relationship between domestic savings’ volume and composition and the introduction of and change in tax incentive use with regression analysis.

The household saving rate is down to 12.0% in the euro area. We will compare the household income, household saving rate and components, gross saving, and gross disposable income for the euro area (EU 28) and Iceland, Norway, and Switzerland between 2004 and 2016, using data from Eurostat. First we conducted a trend analysis with regression analysis, and to recognise the relationship of the indexes, we examined correlations between factors and demonstrated the intensity of factor relations and interdependence.

Our expected result is that governments can influence decisions of households, but that the situation differs by countries.

Keywords: savings, state support, tax incentives