Budapest is in big trouble, may introduce crisis tax

What is the mayor preparing for after 2021?

In the presentation you can read about the economic prospects of the capital. According to them, “rather than a V-shape, the crisis shape is much more likely to be a ‘Nike pipe,’ which means we can expect a slow and prolonged recovery after a rapid drop. Pessimism is also justified for the future – a recovery is expected in 2022/2023 – said Gergely Karácsony, who said that due to these

therefore, the capital must be equipped for long-term crisis management.

Presenting the alternatives for next year’s budget, Gergely Karácsony mentioned that they start from the basic principle that their own resources foreseen for developments are used to finance the operation, the developments are financed with loans, grants and direct funds from the EU. He described the following options:

1. The sale of securities to finance operating expenses for the next few years will lead to a liquidity shortage and bankruptcy by 2022.
2. Reduction of expenses to income level: In this case, salaries do not increase and additional development and operational tasks are canceled.
3. Changes in government attitudes, p. Eg modification of the amount of the payment obligation.
4. Imposition of a restart fee (IPA PLUS).

In this regard, Gergely Karácsony emphasized that maintaining the functionality of the capital is a priority national economic interest, and in times of crisis it is worth rethinking who can participate to a greater extent in public charge, at least temporarily.

By the city administration a For fiscal year 2021 placed in perspective “ipa + concept” is a kind of contribution to crisis management to sectors that were less affected by the epidemic than other industries or the metropolitan government “in struggle.”

The mayor also said that in the next period they will try to renegotiate with the government the central retentions that affect the capital.

Who would pay the new excise tax?

In his presentation, the mayor highlighted that the new crisis tax would be introduced temporarily (Here we remind everyone that centrally determined previous crisis taxes were also declared temporary and then permanently integrated into the tax system.), that is, “in the case of Budapest, until full employment is achieved”.

Under the rule, companies with an IPA tax base of HUF 5 billion would pay 0.5% of the IPA tax base in the following sectors:

• Manufacturing industry;
• Supply of electricity, gas, steam and air conditioning;
• Water supply: collection, treatment, waste management, sewage decontamination;
• Trade, auto repair,
• Transportation, storage, information, communication;
• Financial and insurance activities;
• Professional, scientific and technical activities;
• Administrative and support service activities)

The capital’s budget will be in trouble again this year

He stressed that, according to his calculations, Budapest will lose three times more tax revenue due to the epidemic than the central budget. 70 per cent of capital income comes from business tax, which is expected to be just HUF 139 billion this year after last year’s HUF 165 billion, it added.

Gergely Kar stated: The capital’s HUF 300 billion operating budget has a total of HUF 69 billion in this year’s operating budget., and the city administration expects the “tight years” of the coronavirus epidemic to end in 2022-2023.