Orbán promises tax cuts and simpler regulations – UPDATE: Ukraine would ‘ruin’ EU’s economy

Prime Minister Viktor Orbán promised to streamline and cut taxes and reduce red tape for entrepreneurs at an economic policy forum on Saturday.

At the conference organised by the Hungarian Chamber of Commerce and Industry (MKIK), Orbán said the chamber’s leadership had asked the government to simplify taxes and cut red tape, adding that he believed the best way to reduce taxes was to streamline them. “The chamber couldn’t have found a better partner than us,” Orbán said. “I think we can reach an agreement on this.”

He said the government was prepared to reach a clear and feasible agreement with the chamber’s leadership. The prime minister proposed that the terms of the agreement be implemented by July 1 and should include tax cuts, streamlined taxes and reduced red tape.

Orbán: ‘We are and will remain the government of tax cuts’

Addressing the economic policy forum, Orbán said: “We are and will remain the government of tax cuts.” Hungary is in 7th place in the latest ranking by the Tax Foundation of the tax competitiveness of developed countries, Orbán told the conference organised by the Hungarian Chamber of Commerce and Industry (MKIK). “There is a reason why [the country] isn’t ranked first; this is what we have to work on,” he said.

The prime minister said it was clear from the recent economic policy announcements — particularly the lifetime personal income tax exemptions for mothers — that the government had introduced an element into the tax regime that would “define it in the long term”. He outlined a tax regime applying low taxes and tax breaks to incentivise people to work and start families.

Orbán: Giving up Hungary’s anti-war stance at last minute ‘would have been a crime’

Hungary has been fighting to stay out of the war for three years, and giving up that stance “now that the Americans are finally” share the government’s stance “would have been more than a mistake, it would have been a crime”, Orbán said.

“For three years we struggled against international attacks in order to avoid getting dragged into the war,” Orbán told the conference. “We didn’t send weapons or money, except for humanitarian purposes.” “To give that up at the last minute — regardless of how much pressure we’re under — would be a mistake,” he added. Orbán said the Hungarian economy had lost 20 billion euros since the start of the war in Ukraine three years ago. “So if there’s a country that has a vital interest in the war ending as soon as possible, it is Hungary,” he said.

The prime minister said Hungary welcomed that the United States now shared its position on the war, urging the country not to heed Europe’s call to send weapons and money to the conflict. “Let’s protect ourselves and stay out of this,” he added. As regards what could be expected after the war, Orbán said Hungary had no reason to be concerned about its security, arguing that “NATO will still exist after the war and Hungary will be a member”. He added that Hungary’s two closest NATO allies, the US and Türkiye, had the two strongest armies in the alliance.

“Another thing that will still exist after the war is the strategic alliance between the United States and Hungary,” Orbán said. “The political alliance has already been established, and we’re working on the economic aspect,” he said, signalling a Hungarian-US economic cooperation package “that will be of significant help for the Hungarian economy”.

Orbán calls for change in EU ‘not seen for 20-30 years’

The European Union must undergo change on a scale not seen for 20-30 years, Orbán said, urging the bloc to shift from fiscal conservatism to “the logic of a developer state”. He said that though criticism of the EU’s leadership may be warranted, “in fairness, we should keep in mind that the European Union has to do something that goes against the existing logic of its operations”. He added that it was not certain that the EU would be capable of making that change.

Orbán said that Germany, as the EU’s strongest member, had a decisive role in shaping the bloc’s economic philosophy, noting that Germany is preparing an 800 billion euro package for infrastructure development and defence spending.

“To do this, Germany is giving up its debt brake rule because … this money will have to be borrowed,” Orbán said. He added that this meant the EU’s deficit-to-GDP ratio was likely to exceed the 3 percent threshold which the EU deems acceptable under its current rules.

Orbán: Development funds must be spent on provinces

Though the government is not abandoning the development of Budapest, it intends to mobilise the development funds at its disposal to help the provinces catch up with the rest of the country, Orbán said. Budapest’s economic weight is decisive for the national economy, but the difference in development between the capital and rural Hungary is unsustainable, he said.

Budapest’s level of development is at 165-167 percent of that of the European Union, the prime minister said, noting ongoing development projects such as the southern ring railway line, the addition of a new campus at Pazmany Peter Catholic University, the renovation of the Buda Castle and the development of the integrated tram network.

Orban said no new major projects would be launched in Budapest because the government had to mobilise development funds for projects outside the capital. The prime minister said he expected the government to be able to help the country’s southern region catch up with the more developed parts, just as it had done with the eastern regions.

UPDATE – Orbán: Allowing Ukraine to join EU would ruin Europe’s economy, must be prevented

Allowing Ukraine to join the EU would end up ruining Europe’s economy, “so this must not happen”, Orbán said, adding that Hungary’s say on whether Ukraine joins the EU would be “decisive”. Orbán said Hungary must “make clear” its position on the associated financial burdens, and he urged the public to respond to a public survey on the subject.

Addressing the Hungarian Chamber of Commerce and Industry (MKIK) event, Orbán said the EU decision on Ukraine, made without Hungary’s vote, “affects us” as Europe would finance the Ukrainian army, which is projected to be one-million strong after the war. It would also finance the Ukrainian state rearming itself and fast-track its EU accession to offset the decision not to admit the country to NATO, he said.

This would buckle Europe’s economy, so this must not be allowed to happen, he added. Neither can Ukraine’s EU membership nor its financial programmes be established “without us”, Orbán declared. The prime minister said this matter was of such weight that it could determine Hungary’s fate in the medium and long term.

Hungary’s say on whether Ukraine joins the EU is “decisive”, Prime Minister Viktor Orbán said at an economic policy forum on Saturday, adding that “the Brussels plan” to allow its EU membership would ruin Europe’s economy.

Orbán said Hungary must “make clear” its position on the associated financial burdens, and he urged the public to respond to a public survey on the subject.

Addressing the Hungarian Chamber of Commerce and Industry (MKIK) event, Orbán said the EU decision on Ukraine, made without Hungary’s vote, “affects us” as Europe would finance the Ukrainian army, which is projected to be one-million strong after the war. It would also finance the Ukrainian state rearming itself and fast-track its EU accession to offset the decision not to admit the country to NATO, he said.

This would buckle Europe’s economy, so this must not be allowed to happen, he added.

Orbán declared that whereas Ukraine’s financial programmes could be established without Hungary, its EU membership could not.

The prime minister said this matter was of such weight that it could determine Hungary’s fate in the medium and long term.

At the conference held in the Puskas Arena, Orbán said the Hungarian Chamber of Commerce and Industry’s leadership had asked the government to simplify taxes and cut red tape, adding that he believed the best way to reduce taxes was to streamline them.

“The chamber couldn’t have found a better partner than us,” Orbán said. “I think we can reach an agreement on this.”

He said the government was prepared to reach a clear and feasible agreement with the chamber’s leadership.

The prime minister proposed that the terms of the agreement be implemented by July 1 and should include tax cuts, streamlined taxes and reduced red tape.

Referring to past cooperation between the government and business, he recalled that before the 2010 election, Fidesz, then in opposition, struck an agreement with businesses which was brought under the umbrella of the programme named after Sandor Demjan.

Accordingly, burdens on businesses were reduced, state capital and loan programmes were launched, one million jobs were created in ten years, and 50 percent of EU funds went to small and medium-sized enterprises.

Later fulfilled commitments included boosting the Hungarian economy to the level of the EU average and maintaining an investment rate above 25 percent. Also, it was promised that the jobless rate would hover around 4 percent and the government’s investment policy would lead to capital exports, he said.

Hence, Hungarian businesses could absolve themselves of the accusation that their success hinged on government support by proving themselves abroad, he added. Regarding corporate taxes, he noted that the tax wedge has shrunk by six percent since 2010.

Responding to the MKIK president’s speech, the prime minister said construction of the Puskas Arena had made sense, arguing that there were many more cultural and economic events than sporting events held at the arena. Given such robust demand for seats, he said a bigger arena should have been built.

Orbán appealed to the chamber to help the government when it came to adopting EU rules. The unnecessarily swift and deep adoption of EU rules could be prevented only if another actor such as the chamber had an interest in adopting the rules as far as was sensible, necessary and moderately paced.

Drawing an analogy between football and the economy, he said this year was one of a breakthrough and an attacker was needed to score it. He said the philosophical foundations and basic elements of Hungarian economic policy would not change. “We are and will remain the government of tax cuts.”

He said the family tax breaks were a step in this direction, noting that introduction of a lifetime tax exemption meant that the structure of the tax system could not be changed because such an exemption could not be revoked.

Meanwhile, Orbán said job creation was the most important consideration in terms of predictability. “So we’re not going back in the socialist direction: we don’t want to bring back an economic system of welfare based on budgetary handouts of non-existent monies,” he said. The government, he added, was thinking strictly in terms of a work and merit-based system.

The prime minister said he disagreed with those who said Hungary had exhausted its labour force, arguing that around 300,000 people could still be mobilised. This, he added, required training programmes and an economic policy that was more regionally balanced.

He said the third pillar of economic policy would be support for businesses. Orbán noted that businesses would be lent 320 billion forints (EUR 802.2m) via preferential Szechenyi Card credit and that the PIT exemption for mothers raising three children would amount to an annual 150 billion.

He said that if the government did not respect and support businesses and acknowledge that “it is they and not the state and politics that run the economy”, the economy would start to weaken. The government will therefore continue to support businesses and view the work done by entrepreneurs as assets, he said.

Orbán noted that the government had pumped 400 billion forints into the economy and businesses during the three years of the war compared with 2021. He said Hungary’s “breakthrough year” would also apply to businesses, noting that they were getting 1,730 billion forints more than in 2024. Meanwhile, Orbán said Hungary could not be successful if it did not keep up with global technological changes, adding this meant that the government had to support FDI that included these new technologies.

As regards the government’s fiscal responsibility, the prime minister said that “whatever happens in the world”, the budget, excluding debt servicing costs, must be balanced because “if the primary deficit is also negative”, a level of financial instability the country could not afford would result. He noted that the government has reduced the budget deficit each year over the last 15 years, which demonstrated its “commitment to fiscal discipline”.

Commenting on the document adopted by 26 EU member states at this week’s special summit on their support for Ukraine, Orbán said he had “good reason to veto the document”, which he said was about sending more weapons and money to Ukraine in the coming period.

Hungary, he said, had been fighting to stay out of the war for three years, and giving up that stance “now that the Americans finally” share the government’s stance “would have been more than a mistake; it would have been a crime”. “For three years we struggled against international attacks in order to avoid getting dragged into the war,” he said. “We didn’t send weapons or money, except for humanitarian purposes.”

“To give that up at the last minute — regardless of how much pressure we’re under — would be a mistake,” he added. Orbán said the Hungarian economy had lost 20 billion euros since the start of the war in Ukraine three years ago. “So if there’s a country that has a vital interest in the war ending as soon as possible, it is Hungary,” he said.

The prime minister said Hungary welcomed that the United States now shared its position on the war, urging the country not to heed Europe’s call to send weapons and money to the conflict. “Let’s protect ourselves and stay out of this,” he added. As regards what could be expected after the war, Orbán said Hungary had no reason to be concerned about its security, arguing that “NATO will still exist after the war and Hungary will be a member”. He added that Hungary’s two closest NATO allies, the US and Turkiye, had the two strongest armies in the alliance.

“Another thing that will still exist after the war is the strategic alliance between the United States and Hungary,” Orbán said. “The political alliance has already been established, and we’re working on the economic aspect,” he said, signalling a Hungarian-US economic cooperation package “that will be of significant help for the Hungarian economy”.”This will even be beneficial to us if a tariff war breaks out in the meantime, which will cost every European country, even Hungary,” he added.

Meanwhile, the prime minister said the EU must undergo change on a scale not seen for 20-30 years, urging the bloc to shift from fiscal conservatism to “the logic of a developer state”.

Orbán said the EU was an isolated player in the global economy but Hungary was not.

He said the EU was “at war, or at least locked in a serious political dispute with the United States”. He said the bloc had come into open conflict with the US over the war, was isolating itself from China by initiating taxes and tariffs, and was isolating itself from Russia through sanctions since the start of the war.

By contrast, he added, Hungary’s relations with the US, Russia and China were “the best they can be”. “So if we’re talking about isolation, then it’s true for the EU but not for Hungary,” he said.

The strategy also included “peace, tax cuts, the Demjan Sandor [SME loan] programme and the arrival of European Union funds”, Orbán added.

“We need peace,” he said. “We can’t take another three years that would cost the Hungarian economy 20 billion euros.”

The third pillar of the strategy, he said, involved “cementing” a tax regime that combined families, work and tax cuts.

Meanwhile, Orbán asked for the chamber’s help in the implementation of the Demjan Sandor scheme, which he said was the fourth pillar of the strategy.

He said Hungary will have access to “every cent of the EU funds”. “The EU monies — the agricultural and cohesion funds – will flow in to Hungary, just as they are now,” he said, adding that Hungary has established its negotiating positions to draw down additional funds.

He said 4,682 state investment projects worth a combined 12.5 trillion forints are ongoing in Hungary and 2,949 projects worth almost a combined 6 trillion are currently being carried out. Another 1,733 projects are in the planning stage, 13 priority construction projects are under way, along with 10 major road construction projects worth 1,270 billion forints, and — excluding the Budapest-Belgrade railway line — 29 railway development projects worth 754 billion forints are under way.

Orbán said that though the government was not abandoning the development of Budapest, it intended to mobilise the development funds at its disposal to help the provinces catch up with the rest of the country.

Budapest’s economic weight is decisive for the national economy, he said, but the difference in development between the capital and rural Hungary was unsustainable.

Budapest’s level of development is at 165-167 percent of that of the European Union, the prime minister said, noting ongoing development projects such as the southern ring railway line, the addition of a new campus at Pazmany Peter Catholic University, the renovation of the Buda Castle and the development of the integrated tram network.

Orbán said no new major projects would be launched in Budapest because the government had to mobilise development funds for projects outside the capital.

The prime minister said he expected the government to be able to help the country’s southern region catch up with the more developed parts, just as it had done with the eastern regions.

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