Budapest has to make a trouser belt pull of 30 billion this year. Two tight years are coming, there will be no salary increases, there will be no major improvements. There would be room for maneuver for the capital if the solidarity contribution were reduced or a temporary restart tax could be introduced. Both require a government.

In May, the direction of the local government of the capital decided on a block of 65 billion – recalled Mayor Gergely Karácsony in his public presentation at the meeting of the Council for the Reconciliation of Metropolitan Interests. Unfortunately, half of this blockade has to be implemented and a motion to that effect will be presented to the General Assembly, he announced.

According to the mayor

the epidemic and the crisis reached a total of 69 billion HUF in the Budapest budget for 2020.

Half of this can be covered by restructuring the European Development Bank credit line and releasing a development reserve of HUF 29 billion.

The defection is largely due to a contraction in business tax revenue, which was expected to cost $ 165 billion in the capital’s budget, but now it’s pretty certain only $ 139 billion will flow.

The municipality is committed to the preservation of employment, especially with regard to public services and public services. Therefore, municipal companies do not have to wait for layoffs, there is one exception, spas have 10 percent group layoffs. They are trying to find a place for those who lose their jobs in other municipal companies.

At least two tighter years are coming

As for the future, there is now broad consensus among economic analysts that the recovery from the crisis will not be a quick rebound, but a longer process. Furthermore, Budapest is affected differently by the crisis, tourism, and especially foreign tourism in the capital, is significant, but it will be difficult to recover. The difficult years are expected to last until 2022-2023, when we will reach the 2019 level again, Gergely Karácsony said.

Furthermore, the crisis will not only lead to a drop in business tax, but will also reduce public transport ticket revenue by HUF 20 billion. This is reflected in BKK’s books this year, but next year the company will need 17 billion extra money from the municipality. The other municipal companies, which also make a living from ticket sales, also have a gap to fill, for a total of HUF 3 billion.

At the City Council, it is estimated that by 2020 the local government of the capital may have revenues of 210 billion HUF, while expenditures may reach 254 billion HUF. As far as the operation is concerned, this does not include the investment. In other words, Budapest will lose almost 50 billion guilders. According to Christmas

If they do nothing, the capital’s reserves will be depleted in 2022-2023 and they will enter a desperate situation.

However, the city administration does not choose this path.

The other solution is to cancel non-vital improvements and cut operating expenses as much as possible, trying to reduce the operating deficit. In this scenario, unfortunately, there will be no place for salary increases in the municipality and municipal companies, said the mayor. The city administration wants to increase the financial room for maneuver so that some salary increases can be considered.

The government could help or take less

One way to do this would be to agree with the government a reduction in the solidarity contribution that the capital must pay to the central budget (it will be 12 billion this year and 16 billion next). The general assembly authorized the city administration to do so. Christmas declined to comment on how much hope he had for the talks. However, he previously recalled that the capital generates almost 40 percent of the country’s GDP, against which very little income remains, and since the increase in the solidarity contribution, Budapest has become a net contributor to the central budget (i.e. , pays more money than receives subsidies). ). According to Christmas, of course it is true that all tax revenues will fall due to the crisis, but according to his calculations, the attrition is 7.5 percent for the central budget and 20 percent for the capital. (The government has just increased the solidarity contribution to pay for the capital, citing the shared burden sharing).

Another option to increase the financial room for maneuver would be to introduce a restart tax, the mayor explained. In practice, this would mean a 0.5 percentage point increase in corporate tax, above certain sectors and certain sales, on a temporary basis. According to Gergely Karácsony, it is undeniable that the crisis is affecting everyone, but there are also sectors and companies in the capital that can be asked for less, a somewhat larger contribution, because the Budapest operation is in everyone’s interest.

I can say without exaggeration that we are fighting for our lives

He said Christmas.

Regarding a possible crisis tax, it should be noted that capital will need to be introduced by the government as it cannot change the business tax rules on its own. Regarding the government, Finance Minister Mihály Varga (although before the epidemic) limited himself to talking about reducing and restructuring the tax, because that would make the situation easier for companies.



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