Hungarians go shopping abroad because Hungary became too expensive
In the 1990s and the 2000s, it was not extraordinary to see Slovakians, Romanians or Serbians in Hungarian supermarkets close to the border. The reason was simple: Hungary was cheaper than the neighbouring countries. In the last few years, the trend reversed: Hungarians flood Romanian and Slovakian supermarkets because they can save lots of money if they go there to do their shopping. However, that means the Hungarian state loses an immense amount of taxes, which is bad for the struggling Hungarian state budget.
Shopping abroad is cheap
According to RTL Klub, a Hungarian commercial TV channel, Hungarians spent 40% more money abroad than they did in 2023. The Ministry of National Economy published the shocking increase, so we should take it seriously. The Hungarian government believes shopping abroad is one of the factors why consumption in Hungary – and the state revenues generated by the world’s highest VAT – is falling unstoppably.
The Orbán cabinet believes that is because of the many holidaymakers, but GKI writes about “shopping tourism” instead. Of course, some local subsidiaries of international chains try to attract Hungarians with Hungarian-language leaflets to their stores in Slovakia or Romania.
Photo: depositphotos.com
RTL Klub asked multiple Hungarian citizens living close to the Hungarian-Romanian border. One of them lives close to Nagyszalonta (Salonta), so they regularly buy food and clothes in the Romanian town with a Hungarian majority (53% in 2021). János Kiss said they could save up to HUF 15 thousand (EUR 38) with only one route.
Another local said they travel to Salonta once every ten days. He added everything was cheaper there than in Hungary, including tuna salad. Compared with Hungary, they pay half the price for liver paste in a local supermarket.
Hungary loses tax revenues
Based on the latest figures from the Eurostat, food prices are 27% lower in Romania than in Hungary. In Slovakia, that rate is 6% higher. However, that is only the average. An international chain has been advertising its products to potential customers in Hungary with Hungarian-language magazines for months. Interestingly, the Slovak state tried to oppress Hungarian language use in the Southern regions (where hundreds of thousands of Hungarians live thanks to the post-war peace pacts). Now, they publish Hungarian promotional leaflets to attract more customers from beyond the borders.
Aldi. Photo: depositphotos.com
They list their prices not only in euros but also in Hungarian forint. A Hungarian customer said beer costs 50% of the Hungarian price in Slovakia. Therefore, it is worth doing the shopping abroad.
The Hungarian National Economy Ministry said Hungarians spent 40% more abroad in Q1 2024 than in Q1 2024. The ministry believes consumption in Hungary falls because of the growing savings, property purchases and holidaymaking abroad.
Hungary is more expensive due to its government?
GKI believes holidaymaking means one-day shopping trips to cheaper countries like Romania and Slovakia. CEO László Molnár said more and more Hungarians discovered that Hungarian stores became very expensive compared to their Romanian or Slovakian counterparts, so it happens that they look for their favourite chain’s store beyond the border.
Photo: Aldi/FB
Lajos Braunmüller, a senior analyst of Agrárszektor, said the world’s leading VAT in Hungary (27%) and the Hungarian government’s 4.5% excess profit tax paid by retail chains (or rather their customers) raises product prices by 23% in Hungary.
Consumption fell by 0.1% between May and June. That means consumption in Hungary is still below pre-COVID levels.
Read also:
- Multinationals in trouble: Hungarian government imposes a new special tax, keeps excess profit tax – read more HERE
- Hungarian government plans significant minimum wage increase – Could EUR 1,000 become the new standard?
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9 Comments
The Real Person!
The Real Person!
Despite the higher taxes, teachers are underpaid. Drs were also underpaid but after COVID there was no other reason too keep their salaries low. Such an “smart” government you have, by using all those taxes to programs than does not work like the pro-family one. In the end is a loophole too keep the government rich and the population poor. But yeah, lets keep voting for fidezs
The Real Person!
The Real Person!
27% VAT is pure greed… so, people buy abroad and pay 0% to Hungary.
The Real Person!
The Real Person!
This happens all the time, in very many countries, and is temporary.
Hungary made a huge mistake for kowtowing to the, cough cough, “pandemic” diktats back in 2000. We should’ve continued as normal and told the W.H.O. and other shadowy globalist-socialist despots to stick it.
Now we have the globalist-socialist scumbags disrupting economies through the endless war in Ukraine, in addition to the usual tactics from their playbook: credit ratings, (fiat) currency manipulation, push toward digital I.D.s, etc. RESIST!
The Real Person!
The Real Person!
Please everyone calm down.
The economical geopolitician Michael Steiner said: IT IS TEMPORARY! 😀
The Real Person!
The Real Person!
Steiner Michael.
REMEMBER – trusting, but you do commentate in style, of suffering a “Shortened” ability of memory retention, that Victor Mihaly. Orban and his “Dud” – Minister of Finance – Mihaly Varga – pre the Pandemic had the Economic & Financial “course” they “jointly” agreed and signed off on, in the name of the Fidesz Hungarian Government – and where “On Notice” way back then – Orban & Varga, the “path” that had set Hungary on, was FRAUGHT with MAJOR dangerous Economic outcomes/ramifications..
The Pandemic then Russia’s War on the Ukraine plus the Orban – Fidesz Governments COLLAPSED relationship with the European Union, that have seen Judicial rulings, resulting in HUMONGOUS DEBT owed to the European Union, that daily INTEREST accumulating on-going the longer it remains OUTSTANDING for Payment, adds to the growing INSOLVENCY of the Orban – Fidesz Government of Hungary.
Orban & Varga – the FREEZING of FUNDING from the European Union – there CREATION for which they Never, never, never – be APPEASED.
Orban & Varga – the IDIOTIC Price Capping Policy.
Likened to the path pre Covid these individuals were “On Notice” the Highly dangerous policies they introduced for the Economic & Financial functionality of Hungary, the Price Capping policy – they were WARNED – its Failure, we AGAIN are WITNESSING – the disasters on-going, not just in Inflation – cost of living increases in Hungary, but the entire Economic * Financial picture of Hungary being in total – CHAOS.
Orban – Varga – the GARGANTUAN failings of Financial & Economic Management of the Hungarian Economy, that has NEEDED the BORROWINGS at humongous interest Rates from China and no doubt Russia – the Government DEBT – the tax payers DEBT accumulated by Orban & his “Dud” Minister of Finance – Mihaly Varga, has just FEED into the COLLAPSED state place – of the Hungarian Economy it “hangs” sits to-day.
Tax Scales across the board in Hungary – doing the DEEP process of analysing to – comparisons against “other” member country’s of the European Union – present FACTUALLY that Hungarians are “Slugged” hit hard by the Orban / Varga – “bleed” the tax payers, the corporations, the businesses of Hungary.
Hungarians – are DOUBLED Dipped – on taxes – they PAY to the Orban – Fidesz Government of Hungary.
Vat at 27% – which is a DOUBLE take application on taxes – paid by the tax payers of Hungary, inclusive of businesses and corporations, could include INVESTORS – into the COLLAPSING Hungarian Economy, this 27% – highest of the European Union, just like our current Interest Rate highest in the European Union, then the CRIPPLING decline of the Forint, the nadir – the BOTTOM of our trending Economic & Financial picture is one of Grave Concern – that “nears” being a modern day – Vesuvius.
Orban / Varga – the Fidesz Government of Hungary, are in a Glacial type position that factually see’s them in a FROZEN – Starved place Economically and Financially, there OPTIONS exhausted, no one but China & Russia again – to PLAY the Bank – the LENDERS.
It WORSEN’s – the future PICTURE of Hungary and that NOTHING is GOING to GET Cheaper in Hungary.
The Real Person!
The Real Person!
@michaelsteiner – the “globalist-socialists” and “liberal elites” are not forcing our Politicians to fund Europe´s lowest corporate tax rate (9 percent) with the world´s highest VAT rate (27 percent). And it is citizens (“Hungarian Families!” in Politician speak) who pay VAT …
The long read – but very interesting if you care about taxation:
https://op.europa.eu/en/publication-detail/-/publication/154705e0-38ef-11ef-b441-01aa75ed71a1/language-en
Re “socialist-marxist”, free market / capitalism and government imposed price caps – had the opportunity to think about how that should be justified in the Hungarian context, yet?
The Real Person!
The Real Person!
The Fidesz government is either economically illiterate or simply ignores fundamental economics. Any first year economics student will refer you to the Laffer curve. What this government does is engage in constant manipulation and obstruction of free markets creating obstacles to efficiency which leads to higher prices. They force out competition so that cronies who really don’t know what they are doing as business owners can control industries and charge higher prices. Talented workers and entrepreneurs see that Hungary is a second rate place be in and leave the country. Hungary is left with those who were not ambitious enough to leave or who managed to get a position in a corrupt system.
The Real Person!
The Real Person!
I agree with comments to the effect that Hungary is not a free market economy. Too much government involvement, vested state and affiliated ownership interests, disrupting price controls and distorting market manipulation via taxation policy. It’s also an unstable and sometimes irrational market with unpredictable policy making, where wealth creation is an uphill struggle without government patronage. I wouldn’t open a corner shop in Hungary much less try to run a more serious business.
The Real Person!
The Real Person!
Ironically, consumption taxes are considered economically better than income taxes. We want to encourage people to work and increase production. The problem as comments above suggest is that if you go too far with any type of tax you will choke off economic activity. I can imagine that cross-border shopping won’t be limited to groceries and small items. You can rent a truck and load it with whatever you want because Hungary is part of the EU and the Schengen Zone. The bigger price differences are the worse it will get for retailers in Hungary. The Hungarian government is losing business competition to other countries which shows that its’ economic policy is a great big failure.