Karácsony, opposition mayors protest budget cuts

Budapest Mayor Gergely Karácsony and opposition and independent mayors from around Hungary protested on Friday budget cuts affecting municipalities and called for strengthening the Alliance of Hungarian Municipalities (MOSZ).

Karácsony said parliament would vote on a 2021 budget bill which had a “clear political motive to destroy Hungary’s system of local councils”.

He called on lawmakers “not to stand on the dark side” and vote against the bill.

Karácsony said the budget involved drawing away resources from local councils exactly at a time when they should be helped instead of paying “punitive, extortionate taxes”.

Like almost all governments in Europe, the government should get the municipalities involved in crisis management and help them, regardless of party affiliations, he added. Yet, Prime Minister Viktor Orbán and his government take this opportunity to “destroy local councils”, he said.

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He warned that when local municipalities get punished, it is not the mayor but the citizens who elected the mayor that get punished.

In order to multiply the power of the municipalities, they should join forces, Karácsony said, and called on all towns and villages to strengthen MOSZ. He added that he would propose to the metropolitan council to also join the organisation.

Parliament approves 2021 budget

Mihály Varga, the finance minister, said the budget was dedicated to economic protection, maintaining a state of preparedness to the novel coronavirus epidemic while at the same time, providing sufficient resources for supporting families raising children, showing the appreciation of pensioners, saving jobs and creating new ones.

The budget was approved with a vote of 133 for, 61 against and 0 abstentions.

The budget targets expenditures of 23,465.4 billion forints (EUR 68bn) and revenue of 21,974.2 billion forints, resulting in a deficit of 1,491.2 billion forints.

It assumes a GDP growth rate of 4.8 percent and targets a 2.9 percent-of-GDP deficit, calculated according to European Union’s accrual-based accounting rules.

It assumes 3 percent annual average inflation, level with the National Bank of Hungary’s mid-term “price stability” target.

The budget targets a decline in public debt as a percentage of GDP to 69.3 percent at year-end from an expected 72.6 percent at the end of 2020.

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The budget has an independent chapter for a “Health and Pandemic Defense Fund” with expenditures of 2,944.3 billion forints. It also has an independent chapter for an “Economic Defense Fund” with expenditures of 2,610.4 billion forints.

The budget contains reserves equivalent to more than 0.5 percent of GDP.

It allocates 108 billion forints for supporting jobseekers, up from 83 billion this year.

Family support schemes will get 2,295 billion forints in funding, 67 billion more than in 2020.

Some 2,230 billion forints has been earmarked for education next year, Varga said, noting that this was 78 billion forints more than this year’s education budget. A total of 4,477 billion forints has been allocated for public sector wages, 387 billion more than this year, the minister added.

The budget earmarks 3,915 billion forints for pensions, he said, noting that this also takes into account the reintroduction of the 13th-month pension. It further earmarks 77.0 billion forints of expenditures for a gradual re-introduction of an annual bonus for pensioners.

On the revenue side, corporate profit tax is set to generate 538.5 billion forints, while the Itemised Tax for Small Businesses (KATA) brings in 237.4 billion forints and the Small Business Tax (KIVA) 97.4 billion forints.

Local councils will have a budget of 860 billion forints, nearly 120 billion more than this year. At the same time, local councils with a weaker tax capacity will also be required to pay a “solidarity contribution”, which will raise 165 billion forints.

Source: MTI