Mayor calls on government to compensate local councils for losses in business tax revenue

The government should pay full compensation to local councils for their losses in local business tax revenue, Budapest Mayor Gergely Karácsony said after talks between government representatives and local government alliances on Thursday.

As part of its coronavirus crisis relief, the central 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.

Karácsony, who is a co-leader of the alliance of local governments MOSZ and head of the alliance of Budapest local councils BOSZ, told an online press conference that at the meeting both alliances had represented the position that local governments should be compensated.

The technical details of this are close to being finalised in the cases of municipalities with fewer than 25,000 residents, the mayor said, adding that there was “no reason” why larger municipalities could not also receive compensation.

He noted, however, that the government had yet to respond to the proposal.

Budapest is asking for compensation because it does not want to risk a drop in the quality of the public services it oversees, Karácsony said. Therefore, Budapest is asking companies that can afford it to pay the full business tax, he added.

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