Mayor of Budapest Gergely Karácsony
The Mayor of Budapest, Gergely Karácsony, recently mentioned at an extraordinary press conference that the capital cannot pay more taxes into the central budget, and questioned the solidarity tax. The opposition politician has repeatedly complained that Budapest does not have enough money because of the government, but this claim has now been refuted by Finance Minister Mihály Varga.
Mihály Varga wrote on his Facebook page that the left-wing city government had used up their reserves despite the fact that the capital’s tax revenues were higher than ever before and its tax capacity was growing year on year. The capital’s business tax revenues are expected to exceed HUF 271 billion (EUR 718 million) this year. In addition, the capital will receive an additional HUF 46 billion (EUR 121.8 million) in subsidies from the budget.
Together, the two revenues will exceed HUF 317 billion (EUR 840 million), which is HUF 130 billion (EUR 344 million) more than in 2019. Meanwhile, as the richest municipality in the country, Budapest, like many other municipalities, will have to pay a solidarity contribution to support poorer municipalities, but this amount only totals HUF 57.8 billion (EUR 153 million).
The minister added:
The figures clearly show that the financial situation of the capital is not threatened by the solidarity contribution to help poorer municipalities, but by the irresponsible, wasteful management of the capital since 2019.”
It was in 2019 when the opposition leadership took over the capital.
Debates have been ongoing for years between the government and the capital. Photo: Pixabay
On his Facebook page, the minister highlighted that the municipality of the capital led by Gergely Karácsony inherited HUF 214 billion (EUR 566.8 million) in savings from the city government of then Mayor of Budapest István Tarlós (Fidesz) in 2019, however, this has now been reduced to HUF 25.5 billion (EUR 67.5 million). When asked about the disappearance of the savings, deputy mayor Ambrus Kiss admitted that after the departure of István Tarlós’ leadership, Budapest still had more than HUF 186 billion at the beginning of 2020. He then went on to explain why the money was not there, saying that the increase in subsidies to the government, wage increases, and public transport had increased Budapest’s spending by more than HUF 190 billion in recent years.
At the extraordinary press conference of Budapest Mayor Gergely Karácsony, he announced that the capital is unable to pay into the central budget several different taxes, which amount to around five to ten billion forints, and that the tax authority is being asked to reschedule them.
At the same time, the solidarity tax is being questioned and is not considered legal by the city government. He stressed that they would file a lawsuit in administrative court to reduce the amount of the solidarity contribution.
The solidarity tax is a solidarity contribution levied by the government on wealthier municipalities, which is technically not paid into the central budget by the wealthier, higher-income municipality, but deducted by the state from the subsidies it grants to the municipality, and from which it then provides additional funds to poorer towns and villages. Therefore, it is not possible for a municipality not to pay solidarity tax, since it is collected by the Hungarian State Treasury immediately when the aid to the municipality is paid out.
The mayor also stated that the capital’s municipality would suspend the government’s funding. He also said at the press conference that government austerity measures have made the capital’s financial situation difficult and that without a package of measures, he believes the city will not be able to make it through the year. According to Gergely Karácsony, the government is committed to an anti-Budapest policy, adding that pro-government municipalities have received more money from the government, while the municipality of the capital has not received any utility subsidies.
Featured photo via Facebook/Gergely Karácsony