New documents, allegedly from the Hungarian opposition Tisza Party, show a plan for a radical left-wing economic policy shift, including substantial tax hikes.
Entitled “Hungary 2027–2035 Convergence Program,” the draft, which is reportedly hundreds of pages long, would collect HUF 1.3 trillion in additional revenue annually through tax and contribution increases, austerity measures, and state redistribution.
The document, “each chapter of which is authenticated by several signatures,” proposes an expansion of the role of the state, a radical redistribution of income and wealth, and a comprehensive reorganization of public burden-sharing, writes Mandiner, based on a leaked document obtained by Hungarian news portal Index. Some of the alleged proposals are listed below.
A new progressive personal income tax system would mandate a 22 percent tax rate above HUF 416,000 gross, 33 percent above HUF 1.25 million gross, and a reduction of family tax benefits by 30 percent in the middle income bracket and 50 percent in the upper one.
Some of Fidesz’s tax simplifications would be abolished or limited to micro-enterprises, while the self-employment flat-tax vehicle KATA would only be allowed for students and pensioners.
A new annual 6.5 percent wealth tax on total assets over HUF 500 million (real estate, vehicles, securities, jewelry, etc.) is purportedly also part of the Tisza plan, according to the “leaked document,” along with progressive taxation of capital income (dividends, exchange rate gains, property sales, rent) with rates of 20 percent, 30 percent and 40 percent.
“Solidarity contributions” on employers and individuals would also be instituted, allegedly to the tune of 3 percent-8 percent on pension contributions and 6 percent-8 percent on health contributions.
A new corporate tax scheme would also be progressive: SMEs 13.5 percent-18 percent, large companies 21.5 percent, and multinationals 25 percent (instead of the current flat rate of 9 percent).
According to the Index report, most corporate tax breaks would also be eliminated, and development tax breaks would be slashed.
Meanwhile, the value-added tax (VAT) rate—already unpopularly high for all goods at 27 percent—would be hiked to 32 percent for cars, alcohol, and tobacco products.
Pet owners are apparently targeted by the Tisza party, with an alleged proposal for an extra 4 percent tax on pet products (food, litter) and a “dog and cat tax” of HUF 18,000 per animal per year.
Other targeted areas are said to include the abolition of the childcare allowance (GYED), a 20 percent widow’s pension tax, a 20 percent inheritance tax on health insurance policies, and a lifestyle-based “bonus–malus” system for healthcare premiums.
In what seems especially odd for the left-leaning Tisza is the supposed call to privatize the state health insurance system, with a mandatory private pension fund and insurance system, plus the end of free healthcare for children.
Lastly, the National Tax and Customs Administration would take over payroll accounting from employers, and in one rather Orwellian note, there would be a Digital Employee Card (DMK) for real-time monitoring of employees at work.
Mandiner calls out the supposed plan for “significantly increasing the role of the state” and “putting social considerations ahead of market incentives.”
“The planned reform package would affect broad social strata, from the middle class to small businesses to investors, while raising serious questions in terms of sustainability, economic growth, and competitiveness,” they write.
It should be noted that in a previous suit against Index for “leaking” Tisza’s supposed plan for general tax hikes, the portal at the time stated that its article was simply “opinion.” Now, however, they are clearly alleging to have real, “signed” documents.
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