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As reported, on December 19, Prime Minister Viktor Orbán outlined the government’s latest economic protection measures, including the halving of the business tax on small and medium-sized businesses and sole proprietorships starting in January.
These companies provide the most jobs and are the most vulnerable.
– motivated Viktor Orbán, who added that settlements with less than 25,000 inhabitants receive financial support, while the situation of larger local governments is reviewed individually.
The mayor of Budapest, Gergely Karácsony, reacted the same day that Viktor Orbán executed the local government with this decision. And the next day, several large opposition-led cities decided to turn off the decorative lights for the night of December 23, in protest of cutting the business tax in half.
There were also satisfied voices. For example, István Loránd Szakáli, chief economist at the Fin de Siglo Economic Research, believed that halving the business tax for small and medium-sized businesses and sole proprietorships as of January 1
Helps energize the economy.
László Parragh, president of the Hungarian Chamber of Commerce and Industry, who suggested to the Prime Minister a month and a half ago that the business tax should be suspended for a year, has now told the Hungarian Nation that the announcement to halve the business tax meets the expectations of economic operators.
It’s a great help.
How much is this aid? According to the CSO, in 2019 there were 40,443 small and medium-sized enterprises (SMEs) operating in Hungary, while the number of sole proprietorships was 531,617 in December last year. In other words, almost six hundred thousand companies may be affected by the measure.
In its submission to the Index, the National Association of Local Governments (TÖOSZ) noted with regret that the government had not repeatedly consulted more than half of the 3,155 local governments with the national association of local governments representing only 1,623 local governments.
According to TÖOSZ calculations, otherwise
the exempt business tax amounts to about 150 billion guilders, 70 percent of which will not be included in the budgets of the big cities.
Which also means, according to the advocacy organization, that previous budget cuts, the main victims of which were small and medium settlements, are now reaching the big cities.
To maintain the current level of local public services provided by municipalities, the compensation announced for settlements with fewer than 25,000 inhabitants to compensate for the government measure is unknown. The amount of compensation is expected to be significantly less than the tax credit. This measure, after the elimination of the automobile tax, will fundamentally shock the entire municipal sector.
For the government-planned compensation mechanism to provide tangible assistance to local governments, prior consultation with local government advocacy organizations is essential.
TÖOSZ intends to participate in the development of the support mechanism.
According to the advocacy organization, instead of reducing local governments’ own revenues, the government could support small and medium-sized enterprises with other economic protection measures (employee contributions, reduction of corporation tax, exemption from tax camera, etc.).
Unfortunately, this is not evident in the spending of Hungarian taxpayers’ forints in recent weeks, although if there is a problem, there should be problems everywhere.
– It is declared in the communication of the national association of interests of the local government.
(Cover image: Our photo illustration! Photo: Csaba Krizsán / MTI)
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