Budapest Mayor Gergely Karácsony on Thursday slammed the government for what he said was a failure to keep its promise to compensate local councils for a shortfall in their local business tax revenues.
As part of its coronavirus crisis relief, the government has halved the local business tax this year for companies with annual turnover of under 4 billion forints (EUR 11.1m) and fewer than 250 people on payroll.
“Last December when the prime minister gutted the local council system with the stroke of a pen by depriving localities of one of their main revenue sources … there was still talk of meaningful compensation and meaningful consultations on the matter,” Karácsony said on Facebook. “But we have had neither.”
He criticised a fresh government decision to distribute 23 billion forints among local councils in compensation, saying that Budapest alone had lost out on 31 billion forints’ worth of local business tax revenue. Back when the decision to halve the business tax was announced, the government “immediately threw 15 billion forints at the Fidesz-led localities, but somehow there wasn’t enough money to help the opposition-led cities”, he said.
Karácsony said that while the government had “robbed” local councils, it had increased taxes on households. Whereas in the first quarter of 2020 household tax revenues came to 689 billion forints, they exceeded 750 billion in the same period this year, he said.
“So the people are paying more during a crisis, while the government has used around three-quarters of the money meant to be spent on economic protection measures to enrich its clientele and to further its own political goals,” Karácsony said.
At his regular press briefing, the PMO Head, however, insisted that the decision was “not politically motivated”, adding that the richest municipalities would receive development funds but no central subsidies for their operations. Councils that are less rich will receive 75 percent of revenues lost to the cut to local business taxes, while the poorest councils will be get a full refund, Gergely Gulyás explained.
featured image via Karácsony’s Facebook