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Ruling Party’s Majority Votes in Controversial ‘Special Economic Zone’ Implementation

Ábrahám Vass 2020.06.17.

The Fidesz-KDNP majority voted in the implementation of ‘special economic zones,’ following a similarly-themed government decree, which in reference to the coronavirus outbreak, took away from (opposition-led) Göd the right of disposal over revenues coming in from South-Korean giant Samsung’s local factory.

It was on April 17th when the government designated the city of Göd as Hungary’s first special economic zone as part of economic protection measures linked to the coronavirus. Special economic zones mean that the ownership of that territory (including taxation) will be transferred to the county assemblies. Ruling Fidesz-KDNP managed to hold majority in all of Hungary’s 19 county assemblies.

The decree, issued in April, has raised controversy, as Göd, an opposition-led town, would lose the right of disposal over a large part of revenue coming in from the local business tax and the supervision over the plant, its surroundings, and development. Göd’s opposition (Momentum) Mayor Csaba Balogh called that decision a “death sentence” for the town.

This latest legislation, presented by KDNP leader and Deputy PM Zsolt Semjén, makes it possible for the permanent designation of such zones, independent of states-of-emergency.

Contrary to the first plan, the value limit for the implementation has been pushed down to HUF 5 billion (EUR 14.5 million) worth of investment (from HUF 100 billion), meaning that the government will be able to apply this procedure to many more municipalities than before. Good news, however, for the big municipalities, that cities with county rights (there are 23 of them at the moment), and Budapest are exempt. In addition, the projects must have an impact on the economy and employment, not only on a local but on a regional level.

The government argues that the new regulation will help to restart the economy and create jobs. The foreign minister, for example, said that in the case of a bigger investment, a broader set of talks are needed and they shouldn’t be entrusted exclusively to a not too big municipality, arguing that development projects in these zones could affect the entire county, therefore it is fairer if several localities benefit from the related tax revenue.

However, those opposing the law argue that this will enable the political leadership to take away financial resources from opposition-led towns and redirect them to local councils where Fidesz has the majority. They say it’s just another step towards centralization, to take revenge for the results of the municipal elections and to make the situation of the opposition (-led municipalities) even more difficult. Left-wing daily Népszava writes that it is also a question of how the county councils could take over tasks, something that they weren’t used to doing beforehand. In addition, the legislation is only aimed to serve large multinational companies’ (like Samsung’s) interest, as the move makes it possible for decision-makers to ignore locals’ interest and will.

Featured photo illustration by László Beliczay/MTI