“Multinational companies have scored a win yet again,” the deputy group leader of opposition LMP said on Tuesday, referring to an agreement between the Hungarian government and the European Union on the proposed global minimum tax.
The compromise reached “is one that large capitalists would be glad to see”, Mate Kanász-Nagy told a press conference, adding that thanks to Hungary’s exemption from applying the minimum tax, large corporates would also be exempted from paying higher corporation taxes. Hungary will “remain a tax haven”, and international companies will “pay less to employees than, for example, in Germany” and also enjoy the benefits of more lenient environmental rules, he said. Kanász-Nagy called for an “alternative” solution that supported small and medium-sized companies and the public sector.
Hungarian opposition parties on Tuesday reacted to the proposal by EU member state ambassadors on approving Hungary’s recovery plan, which is expected to result in EU leaders unblocking of the country’s recovery funds. The Democratic Coalition insisted Prime Minister Viktor Orbán had been dealt a big blow in Europe, having “failed” to immediately secure recovery funds, while a large portion of cohesion money had also been frozen despite Orbán having “caved” on the issue of the EU loan to Ukraine and the global minimum tax.
Momentum said Orbán bore sole responsibility for Hungary receiving less money from the EU, adding that more than 4,800 billion forints (EUR 11.7bn) in EU funding still hung in the balance. The Socialists said the risk that a large portion of catch-up funds would be withdrawn was ever present, and Orban had merely secured a reprieve and must show the government can comply with European norms. The budget, it added, would now have access to enough funding to stave off “an even bigger crisis”.
Jobbik said the government had “backed down” on EU support for Ukraine and the global minimum tax, and yet its single biggest duty to secure the funding to help Hungarian citizens had not been fulfilled. LMP said the decision of EU ambassadors was good for large European companies, given that Hungary has been exempted from applying the global minimum tax. “Hungary can remain a tax haven,” it added.
“We are glad that the European Union and the government have reached an agreement,” Budapest Mayor Gergely Karácsony told a press conference on Tuesday in reaction to news that Hungary’s EU recovery funding is likely to be unblocked. The government is “now obliged” to meet the community’s requirements before the funds can actually be accessed, the mayor added.
Karácsony said he was glad that Hungary would receive grants from the recovery fund, and urged the government that it should use the mechanism’s loan component, too. Money borrowed under the mechanism could be used in full to rebuild the country’s energy system, he added. Karácsony, who is co-leader of the Association of Hungarian Municipalities (MÖSZ), said the funds should also go to local councils, adding that “reducing Hungary’s dependence on Russian gas and completing a green transition could hardly be possible without changing municipal energy provision”.
Answering a question, Karácsony said “ideally” the recovery funds should be divided up equally between central investment projects, private investment projects, and municipal services.
The European Commission has demonstrated that it can act in cooperation with EU member states against the government of a country to protect the interests of that country’s citizens from their government, opposition Socialist MEP István Ujhelyi said on Tuesday. Ujhelyi told an online press conference in Strasbourg that “notwithstanding the best efforts of the [Hungarian] propaganda machine, it is hard to present Prime Minister Viktor Orban’s retreat as a triumph when he has also been issued with an official document showing that [his government] violated the rule of law and abused EU resources.”
It is the first time in EU history that it is officially stated that a member state government severely violated the rule of law and consequently a part of its EU funding has been frozen, he said. “If ruling Fidesz does not implement the amendments to scale back its System of National Cooperation (NER) as promised, then Hungary could lose the 8,000 billion forints which is now frozen, including 4,800 billion euros non-refundable support, for good”, he said.
Ujhelyi said that Monday’s meeting also revealed that the Hungarian government had exploited the global minimum tax and support for Ukraine as “a means of blackmail and to thwart cooperation”.