A government committee comprising representatives of the Prime Minister’s Office, the interior ministry and the finance ministry will meet with representative bodies of every local municipality to discuss their finances, the head the PM’s office said on Wednesday.
Gergely Gulyás told a press conference after meeting mayors of towns with over 25,000 residents without county-seat status that local municipalities had seen a steep rise in revenues between 2011 and 2019 thanks to Hungary’s high economic growth. The coronavirus epidemic resulted in a 5.2 percent recession last year but it was still “significantly below” the European Union average, he added.
The central budget registered a deficit of several thousand billion forints and the government’s position is that the burdens must be shared between the state and local municipalities, he said.
Despite this, he said the government wanted local municipalities to feel that while taking on extra burdens, they could still rely on the state.
At the same time, he said it had been the right decision by the government to allow SMEs to pay only half of their local business tax to local councils.
“This did not involve drawing money away, because the money stayed with the businesses … and they can guarantee jobs and in best cases even create jobs,”
Gulyás said. He added that local municipalities with less than 25,000 residents would get fully compensated for the loss in revenues.
In response to a question, Gulyás said opposition and ruling party mayors had been represented in similar numbers at Wednesday’s meeting.
Head of the local municipalities association MOSZ György Gémesi told a press conference after the meeting that 12 of the 23 local municipality representatives attending the meeting had three requests.
They asked for full compensation for the loss of local business tax revenues, they wanted to discuss compensation options for the costs of anti-epidemic efforts and ways to get back vehicle tax revenues.
None of these requests were met and Gulyás told them that he had no authority to change the government’s decisions, he said.