[ad_1]
Viktor Orbán announced several economic protection measures on Saturday, one of the most important being to halve the business tax for small and medium-sized businesses and sole proprietorships starting in January. The prime minister announced the decision, citing the fact that these companies are the most vulnerable and provide the largest number of jobs in the country. The municipalities will thus lose a large amount, to alleviate this, the Prime Minister announced, settlements with less than 25,000 inhabitants will receive financial support and the situation of the largest municipalities will be reviewed one by one.
In May, Gergely Karácsony, mayor of Budapest, reacted that Viktor Orbán executed the local government with this decision. In his opinion, the type of tax is the most important basis of public services, they are in danger by halving, while in the case of companies it turned out to be low cost anyway, so it is not of great help to them. The politician wrote with this decision of local governments they take approximately the price of the Chain Bridge, with which they pay for public lighting, public cleaning and maintenance of green spaces.
In the present decision, it is objectionable that
aid is not targeted, government releases business tax when not needed,
The halving of the local business tax will also provide relief to companies that have not been so affected by the crisis, but have been significantly affected, will not receive additional support. Big corporations gain a lot from it because they add huge net sales and then pay the tax rate, but for smaller corporations it doesn’t mean redemption. However, it puts local governments in a serious position.
According to the OSC report, there were 40,443 small and medium-sized companies operating in Hungary in 2019, and the number of sole proprietorships in December 2019 was 531,617. More important,
These companies, complemented by other companies, paid around HUF 800 billion in local business taxes last year.
to the municipal coffers according to the statement from the CSO and Portfolio.hu. In Budapest alone, this amount was around HUF 160 billion in 2019 (the capital’s fashion revenue has increased by roughly 50 percent in the last 8 years).
The larger the population of a city, the more it will resist a radical reduction in business tax revenue, this government decision will hit them harder. At the moment, questions about the valuation of cities with less than 25,000 inhabitants are being debated, as Viktor Orbán promised this Saturday. It is also unclear how, by what criteria, the Cabinet wants to compensate for the huge loss of income in the big cities.
As one of the points of the economic protection measures, the government also prohibited the increase of existing taxes and the introduction of new taxes in the law on Saturday, so
Municipalities cannot really help themselves, they have become vulnerable, and the government will be the only one to decide which one to put a lifeguard on and which one not.
Top image: Prime Minister Viktor Orbán (b) is negotiating with the leadership of the Association of Cities with County Rights (MJVSZ) in the framework of a series of consultations aimed at preparing new elements of the economic action plan in Budapest, in the Carmelite Monastery on December 19, 2020. MTI / Prime Minister’s Press Office / Zoltán Fischer
[ad_2]
