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A special tax on billboards and other outdoor advertising introduced before the 2018 elections, has been abolished. The revenue was collected by the local governments, which means another hundreds of millions have been taken away from them.

In early October 2016, it looked like that the Orbán-government wanted to ban public advertising altogether, and all billboards dismantled. However, from 2018, the government created the opportunity for municipalities to heavily tax advertising companies if they wanted to. One possible aim for the Orbán-government was to make some advertising companies (mainly Viktor Orbán’s ally turned enemy Lajos Simicska’s Publimont) worthless, which then can be bought cheaper by pro-government business circles.

It seems to have worked, and Lajos Simicska sold his advertising company to Lőrinc Mészáros, a close friend of Orbán and one of Hungary’s richest man. Although the ownership background of public space advertising companies changed thoroughly in 2018, several municipalities decided to levy a poster tax at the maximum tax rate in 2019, of which a total of about HUF 3 billion was paid to local governments last year.

As the government now prohibits this, many local governments will have to deal with the consequences of this revenue loss.

Újbuda, for example, will lose HUF 110 million (EUR 0.31m) this year alone. Zita Bakai-Nagy, Deputy Mayor of Újbuda, told RTL News that the government has already taken HUF 1 billion 152 million (EUR 2.43) from them.

Mayor Karácsony: Budapest Becomes Net Payer to State First Time in 30 Years
Mayor Karácsony: Budapest Becomes Net Payer to State First Time in 30 Years

Budapest Mayor Gergely Karácsony said on Friday that for the first time in 30 years, Budapest has become a net payer to the state budget, which imposes an annual burden of around 20,000 forints (EUR 60) on each resident. Karácsony said on Facebook that the government had withdrawn more resources from Budapest than the support […]Continue reading

The same loss is HUF 47 million (EUR 0.13m) a year for Szombathely, and tens of millions of forints for Szeged. According to the Deputy Mayor of Szeged, Rózsa Széchenyi, the government will do everything possible to bleed out the local governments.

The government is not fighting against the virus, but more against the municipalities. It does not take much imagination to know who owns these billboard sites and who is helped by this measure, not the municipalities for sure!

The finance minister said that the change was justified by the simplification of the tax system, adding that after the amendments were adopted, rising tax revenues due to economic growth will compensate local governments for any loss.

Earlier, the government also deducted HUF 34.4 billion (EUR 0.1m) in vehicle taxes from local governments.

Featured photo illustration by Márton Mónus/MTI.