Budapest mayor Karácsony slams government municipal policy

All localities will suffer when a portion of local business taxes are moved to the central budget, and Budapest will be the biggest loser, Gergely Karácsony, the capital’s mayor, told a press conference on Monday.

Karácsony slams government’s policy

Local councils would lose out as state funding will fall in real terms as the nominal 1 percent increase is eaten up by inflation, while the so-called solidarity tax deduction from the local business tax will rise by 20 percent next year, he said.

Higher business taxes would help local councils were it not for the redistribution as part of the central government’s Competitive Districts scheme, Karácsony said, adding that the amounts raised would be put to better use by the localities that produced them.

He said Budapest must pay 100 billion forints from its own revenues raised through the business tax next year, while councils will have to double tax payments to the state under the new measures.

He noted that 18 months ago the Budapest administration sued the government over the solidarity tax, adding that it won the case and the Constitutional Court then upheld the ruling. The court had found that withdrawing a portion of the business tax could render the metropolitan council inoperable, he added.

The case is ongoing, he noted, and hopefully the court would again rule in Budapest’s favour as this would be the only guarantee that public services in the capital could be maintained.

György Gémesi, the local government association’s head, said that this year the solidarity tax had brought in 307 billion forints, and this would grow to 350-360 billion.

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