On my Facebook page I discovered a note that István Vágó, the television personality, posted about a Tacitus quotation. In Latin it goes like this: “corruptissima re publica plurimae leges.” One doesn’t even have to know Latin to get the gist of the sentence. “The more numerous the laws, the more corrupt the government.” Well, well, perhaps Viktor Orbán should read Tacitus’s Annales in his spare time. The sentence in its entirety has even more relevance to Hungary: “And now bills were passed, not only for national objects but for individual cases, and laws were most numerous when the commonwealth was most corrupt.” “Bills passed … for individual cases”! Count the ways the Orbán government has resorted to this dubious practice.
More and more laws are being hatched with the greatest of ease and without any compunction. Just today Lajos Kósa, managing director of Fidesz, announced that the temporary provisions the Constitutional Court found unconstitutional can easily be remedied. “It is simple: the Constitutional Court didn’t accept our concept that there is a Basic Law and there are the temporary provisions. So, we just have to combine the two. Not a big deal.” This is how legislative work is being conducted in today’s Hungary.
Lajos Kósa made this statement in Gyula, close to the Romanian border, where the Fidesz-KDNP parliamentary delegation is holding a three-day meeting. Orbán is also attending this gathering. Earlier, the opposition forces announced a demonstration protesting the Orbán government’s policies to be held in conjunction with this meeting. A few hours later the Peace Marchers said that they would go to Gyula in support of the government. Indeed, busloads of pro-government sympathizers showed up from all over the country. They even came from Romania. I saw a sign indicating that the men and women behind the sign were from Oradea/Nagyvárad. As usual, the pro-government sympathizers were more numerous than the opposition forces thanks to the nationwide recruitment organized by so-called civic groups that by all indications are financially supported by the government. One of the organizers of the Peace March was Zsolt Bayer, the notorious anti-Semite who also wants to solve the Roma question “by any means.”
In the past few details of these Fidesz pow-wows leaked out to the public, but it seems that party discipline is becoming frayed as difficulties mount. It doesn’t matter how often government officials repeat that the Orbán government’s almost three years in office “have been a success story,” fewer and fewer people believe the government propaganda. After all, according to the latest polls, 75% of the adult population of Hungary think that the country is heading in the wrong direction. It is thus not surprising that inside the Erkel Hotel where the meeting is taking place there were apparently a few tense moments.
A few hours after the commencement of the “retreat” the public learned quite a few details. By 7:00 p.m. Világgazdaság reported that Viktor Orbán had announced that the next governor of the Hungarian National Bank will be György Matolcsy after all. That piece of news sent the forint tumbling. The press department of Fidesz promptly issued a denial, claiming that Matolcsy’s name wasn’t even mentioned at the Gyula meeting. So, the forint stabilized. Hungarian analysts are still convinced that the next bank chairman will be Matolcsy, but they believe the bitter pill will be administered slowly over time to avoid a collapse of the Hungarian currency.
By early morning today newspapers reported that there was “sharp disagreement” at the meeting over the lowering of utility rates. We’ve heard for some time that the state is planning to fix the price of natural gas. First they talked about a 10% reduction in the price across the board, but lately Fidesz politicians raised the stakes. János Lázár talked about a 30% reduction sometime in the future. And more and more promises were made: they will lower the price of water, fees for sewage, garbage collection, even the price of the compulsory cleaning of chimneys. Clearly, these ideas are preliminaries to the 2014 election campaign. It seems that Fidesz has decided to follow the bad old habit of paying off the electorate before the election and imposing austerity packages afterwards. In this same vein Fidesz politicians began talking about reintroducing a thirteenth-month payment for pensioners. Mind you, perhaps only once at the end of 2013. Perfect timing.
There are about 60 Fidesz-KDNP MPs who are also mayors, and in most of their cities the water companies are owned by the local government. The water companies at the moment are barely making it, and if the government forces them to lower prices they will go bankrupt. These politicians therefore argued for some kind of compensation from the central government. But, as we know, the government has no money. What new trick will they come up with to cover the cost of this generosity? One can only guess, but the Orbán government is exceptionally inventive when it comes to taxes.
Today the arguments continued. This time József Ángyán, former undersecretary in the Ministry of Agriculture, was on the offensive. He has been a severe critic of the Orbán government’s handling of the long-term leases of thousands and thousands of acres of government land; the leases were given to friends and relatives of Fidesz politicians. You can read more about Ángyán in a post entitled “Agricultural subsidies and the Fidesz oligarchs.” Orbán is really fed up with Ángyán. The only reason he hasn’t asked for his resignation from the party and from the Fidesz parliamentary delegation is because he is convinced that sooner or later Ángyán will resign on his own volition. Orbán stated, however, that he considers Ángyán “not worthy of the caucus of which he is a member.”
And finally, it seems that Viktor Orbán has given up his pet project: voter registration. After the Constitutional Court annulled the proposed law, Fidesz politicians for a while indicated that, although they would obey the ruling for the coming elections because of time constraints, they have every intention of changing the law after the 2014 elections. It seems that they have changed their minds. Why? I think because studies and polls indicated that registration might hurt Fidesz more than it helps.
Some people are convinced that Orbán might take advantage of this apparent defeat. After all, if registration had been deemed legal, no elections could have been held before 2014. Without that time constraint Orbán could call for early elections when the opposition is in total disarray. Knowing him, this scenario is a real possibility.
“But, as we know, the government has no money. What new trick will they come up with to cover the cost of this generosity? One can only guess, but the Orbán government is exceptionally inventive when it comes to taxes.”
They also own the printing machines, the ones that print forint banknotes.
sinking ship but the captain keeps busy by arranging the deck chairs.
the passengers must throw the captains/captain overboard.
Skyping with an Hungarian friend yesterday, he said that even with the reduction in utility costs, Hungarians are still paying more than Germans–and their income is much less. I have no way to check on this. He stated Orban never does anything illegally–he just changes the law and then does it.
Most banks started to collect Orban’s transaction taxes from February 1st.
I used my ATM card to get cash on January 31st, to no avail, the bank claimed that bookkeeping day was a day later, so they charged it.
In dollar terms, it looks like the maximum of [0.3% or $1]. So it is $1 even if you take out $5, and it is 0.3% if you take out more than $340.
The average net salary in Hungary is 142,000 HUF ($653) monthly, i.e. $7,836 a year.
The government will collect an extra $100 million (22 billion HUF) from taxing the salaries this way.
The average gross salary was $12,120 in 2012, so the government’s take was 35% with no personal exemption or standard deduction. There is flat tax here, gentle(wo)men.
In addition, Hungary has the highest VAT in Europe, 27% (18% on bread and milk). If you earn less than the average salary, i.e. you are in the majority slice of the population (since the median is smaller than the average), you will spend your full salary every month, so no matter how poor you are, you will pay 35%+27%+0.3%, i.e. more than 62% of your salary straight to Orban’s government.
Let me correct the 62% number:
35.35%+ 27%*65.65%+ 0.3% = 53.1% [minus 9% of the money spent on bread and milk] go straight to the central government.
I apologize, the right formula is 35.35% + 27.3%*65.65% = 53.27%
So if I earn 100 forints, my disposable income is 47 forints, while the government gets 82 forints (53 forints from me and 29 forints from my employer).
Gretchen: it is probably difficult to understand for Hungarians (even to educated people), that the fact that Hungarians (Romanians etc.) earn less than Germans, does not affect the price of energy, whether it is natural gas, electricity, gasoline whatsoever.
This is because input costs of energy are the same everywhere (ok, leave out the subsidised fuel in Iran or the Kingdom of SA) as oil, natural gas, machinery from which a power stattions could be built cost the same everywhere.
So citizens in poorer countries have to pay the same price which seems expensive and even to educared people unfair. This thinking is not susceptible to rational analysis, its personal, “I have less money so I am entitled to cheap energy. Its in the pipes, its available, why do I pay so much?”.
I doubt that the German prices are cheaper, but in any case Hungarian prices are very far from being expensive relative to EU peers (it is certainly not enough to incentivize electricity producers to invest). (Note that VAT is much higher than in many countries and obviously as a much smaller puchaser, 1/10th of Germany, we pay a somewhat higher price for natural gas; in addition, the government sets electricity prices, including profits for MVM – syphoned off through cronies; others in the sector don’t make much profit, if at all).
Yes, Orbán and his firends are lawyers. That was a bit difficult to understand by MSZP and opposition people. And they will forever be in disadvantage because they do’nt have the lawyers’ thinking and thus act slowly both figuring things out and drafting laws and regulations when necessary. And they still don’t get it, because a non-lawyer cannot ever understand a lawyer. They will be taken advantage of.
If there is a problem, Orbán changes the constitution – legally. If that is not enough, he packs the court to get a favourable verdict – legally. So most often he indeed acts formally legally and that is his image.
That said, I can still name 10 issues which turned out to be abjectly illegal, despite their genious: EU court decided against the firing of judges wholesale at age 62, the constitutuional court repealed registration law recently and more are on the way. They are very savvy, but they do make mistakes and your friend should read more — but I guess a Fidesz-voter would not not read media from which he/she can get info about the failures only that the government leaps from triumph to triumph.
Sad. But this is a nice reminder that people are uneducated and only care about what is in their pockets. A pension increase (paid for by Russians until we pay it back by building uncessary atomic power stations for 10s of billions of EUR), a decerease of water or electricity what count and get them to vote for Fidest. And nothing else matters…
@tappanch: Beautiful… Orban&co is robbing the country blind. The political ruling class accumulate wealth and capital on the back of the taxpayers (and on the back of the EU ), as most of the state money is going to Orban’s business buddies. Of course, most of the burden falls on the poor.
Capitalism, Hungarian style.
Thanks for sharing this.
The Catholic priest of Kecel speaks against the Fidesz mayor and his “gang” for not working for the community but for themselves.
His language is stronger than that of most opposition politicians:
You mean 29% is Social Security, which suppose to be yours and not your employer. But you forget Training Fund Contribution, EHO and special tax for the employer if he does not have the minimum required disable persons working for him.
On top of that the employer needs to pay Personal Income Tax, Social Security on various expenses, such as mobile phone, use personal car for company, part of public transport and various representation costs. Furthermore, some part are no even deductible as company expenses for Corporate Tax and Local Business Tax.
This is fantastic!
The vicar’s name is Roland Buranyi. He banished the major, Ferenc Taszilo (“and his gang”) from all Catholic institutions in the city for going to report him to the archbishop of the Kalocsa archdiocese.
In the homily he lashed out several times at the Fidesz major and his cohorts citing lot’s of undeniable facts.
Lipisssg: I think you are right in your assessment. However, I just received the new bill (with 10% reduction). The total bill is not 10% lower, but approximately 6%. Reason the fixed rights went up due to maintenance costs.
Talking about maintenance costs. Family lives in Budapest in the panel flats, and last summer they received isolation. It really has a major impact on the usage. Actually, they did not switch on the heating radiators whatsoever as the pipes were warm enough to heat the entire flat.
But it had no impact on their bill.
The government is supposed to set aside 10 forints towards your retirement, 4 for the health care, 1.5 for unemployment benefits. That leaves 66 out of 82 taxpayer forints to spend on itself.
Do you mean a maximum of 0.3% and a minimum of 1 dollar?
And why in dollars?
In the UK we have a variety of ‘essentials’ that either aren’t subject to VAT or to a lower rate (e.g. takeaway meals, food in general, baby clothes, newspapers and books are (I think) VAT free, and for electricity and gas the rate is only 5%), so, although VAT is an evil tax, it doesn’t hit the poor quite as hard as it otherwise would. Is there not something similar in Hungary?
Also, is there not a tax-free element of salary – e.g. the first 500,000 isn’t taxed?
There used to be, but was abolished by either VO,Medyessy or GY. I believe it was GY, but I am not certain. Now most products and services are 27% and some are 18% and a very few are 0% (school and hospital things).
As to the tax free part of salaries, was abolished by VO, and at the same time introduced flat tax rate.
No, there is tax on the first forint earned.
Not in Hungary, no. It’s a ‘flat tax’. You are taxed at the same level whether you earn 10,000 Ft a year or 10 billion.
There used to be, but with the flat tax they got rid of it.
The Orban government heralded as a big achievement that they did away with the “jóváírás”, i.e. reimbursement for the poor at tax time.
VAT in Hungary
5%= medication, baby formula, printed newspapers & printed books
18% = bread and milk from a grocery store
27% = all other food stuff, heating, electricity, clothing, e-books & everything else
Correction: the VAT on district heating is also 5% since January 2010.
From January 1, the heating bill is supposed to go down by 10% by Orban’s order, but the district heating company in Budapest started to charge extra for fixing a pipeware problem. In the past, repair costs were included in the maintenance part of the bill.
Detailed VAT rates in the EU:
Click to access vat_rates_en.pdf
I am staggered by this – tax levied from the first forint? It doesn’t seem possible that any government, even Szent Orbán, can get away with this.
I’ve always said (in connection with the UK specifically, but generally as well), that the fair thing for a government to do in times of ‘austerity’ is to increase tax, not cut benefits. But, not only does this not work if, like Orbán, you’ve already got the poor paying tax, but also I can’t see how he COULD raise any more tax!
I hadn’t realised until now just how insane his economic policies are. I knew they were daft, but not this crazy.
Just upping this again, in case it got missed. An answer to this would be appreciated (in order to support my vain, one man, attempts to counter my Fidesznik relatives!).
Everything is in HUF, but I converted the numbers to dollars.
I am describing the info I got from one of the banks today, where I enjoyed free withdrawals as recently as nine days ago. Other banks have similar fees.
This is a function consisting of two line segments.
Its graph is the horizontal line fee=1 if the money withdrawn is between $1 and about $340.
If the withdrawn money is more than that, then fee=0.3%*money.
I think the government gets exactly 0.3% no matter how much you withdraw.
(So the bank makes some profit out of this if you withdraw less than $340)
Every electronic transfer to another bank gets charged 0.2%, but if you want hard cash, you pay 0.3% to Mr Orban.
Why in dollars? No it is in Forints, but if you use Google Translation it automatically transfers in Dollars.(My explanation).
Furthermore, it is not an ATM tax, but a Financial Duty payable by the banks on ATM withdraws, and cheque payments (also called Check Tax).
http://www.portfolio.hu/vallalatok/penzugy/beszedes_szamok_igy_haritottak_at_a_bankok_a_tranzakcios_illeteket.178986.html (in Hungarian)
VO government communicated that this tax is only payable by banks and not by The People (A Zemberek). Of course this is not the case, and the banks are charging this on to the consumers. Each bank is doing this in a different way though.
http://www.origo.hu/gazdasag/20130110-ingyenes-kartyahasznalattal-jol-kivalasztott-szamlacsomaggal-csokkentheto-a-tranzakcios-ado.html (in Hungarian)
Lipisssg: “So citizens in poorer countries have to pay the same price which seems expensive and even to educared people unfair. This thinking is not susceptible to rational analysis, its personal,”
I believe that you are right also in the assessment that water charges are lower in Hungary than in Germany, but with OV of course everything is possible.
It is quite comprehensible that people complain about how expensive Hungary is compared to incomes, but that is exactly why it would be of such importance that 1) the government income is used more rationally and not for the personal needs of OV and his buddies, and 2) that economic policies adapt to the 21st century so that Hungary could get back to some trend growth. Both could be – prospectively – helped by more involvement of the broad public in any kind of the opposition groups except Jobbik and their likes. For all those who will not listen to this anyway, I will repeat that the interests of the broad public will not be served by an autocrat, no matter how caring he presents himself, but only if the broad public gets better organised polically and makes itself heard.
That people from the Catholic Church have been so direct is very brave. And again, it will have an impact only if more people join in and bring with them some rather concrete ideas about what should be changed and how.
I wish that priest hadn’t given that talk from the pulpit….that made me cringe a little. I feel it’s wrong to talk politics from the pulpit like, and naming names as well, he should have done this elsewhere. If people are quick to condemn priests who sing the praises of O.V. from the pulpit, then it should go both ways. (Yes, I know he wasn’t telling anyone who to vote for)
That being said, what an amazing priest, it’s good to know there are brave people like him around.
Thanks tappanch, that was what I thought you were saying. Same system as the ATM withdrawal charge for us külföldi – £2 on all withdrawals up to £100, then 2%
I have great ‘fun’ with this each time I withdraw money, trying to pay the minimum charge by working out in my head what £100 is at the current exchange rate – whilst also trying to ensure that I don’t get all high denomination notes. Never get behind me in an ATM queue!
I have never understood why people think it’s wrong for religious leaders to comment on ‘political’ matters. Would Christ have kept quiet about people starving or being wrongly convicted, just to avoid upsetting the High Priests or the Romans?
We had this in the Thatcher years – church leaders being condemned by politicians because they were publically concerned about rising poverty.
The dire tax situation in Hungary made me wonder how it compares with other countries, so here, for comparison, is the situation in the UK:
(Apologies if this is of little interest to some readers, but for me at least it helped put the Hungarian situation into perspective.)
You don’t pay any income tax until you earn just over £8,000 a year (2.78m Ft, $12,700, €9,500), then you pay 20% on earnings above that, up to £32,000, and then 40% on earnings between that and £150,000, and then 45% (it was 50% until recently) on earnings above that. The tax-free income limit is higher for certain categories – e.g. for over 65s it is £10,500.
There is also a second income tax called National Insurance (NI), which is supposed to fund the State old-age pension. This is levied at 12% from the lower tax threshold, with an additional 2% from £32,000. This is much more complex than income tax in its variations and exemptions, so it’s difficult to just ‘add’ it on top of income tax to get total ‘income’ tax – especially as once you’ve paid your 35 years of NI ‘contributions’ you don’t have to pay any more.
To put out tax rules into perspective, the minimum wage in the UK is £6.19 an hour, which works out as roughly between £11,700 and £12,900 a year, depending on the hours worked in a week (usually between 35 and 40), so even on minimum wage you would pay some tax and NI. The State pension (I’m ashamed to say) is only about £5,600 a year, so a pensioner will not pay any tax (and obviously wouldn’t pay NI anyway), although those with additional, private, pensions which take their total income above £10,5000, will pay tax. (State pension is currently paid from 65 for men and 60 for women, but in 2020 it will be 66 for both, and, a few years later, 67.)
Someone on the UK average salary – £26,500 a year (9m Ft!) – would therefore pay about £3,700 income tax, plus about £2,200 NI, which equates to a total income tax of just over 22% (taking into account their tax-free pay). £26,500 is a pretty good salary for many people, for instance most shop workers only get the minimum wage, or only slightly above that, but many people (higher grade office workers, teachers, train drivers, etc) get considerably more than this (£40,000+) and therefore pay 40% on a small part of their income (plus 14% NI), and a large minority ‘earn’ vastly more (£100,000+ up to several millions).
VAT (which was 8% when it was introduced) has gradually crept up until it is now levied at 20%. But there are many exemptions (food, takeaway meals, children’s clothes, books, newspapers, etc) and some special low rates (e.g. VAT on gas and electricity is 5%). It is therefore very difficult to calculate the overall tax burden of VAT, but a wild guess would be that people at the lower end of the salary scale possibly don’t pay much VAT (as most of their income goes on lower, or non-rated products), whereas those on average earnings possibly only pay VAT on about half their purchases.
So, adding all this together (including my wild VAT guesses), the overall tax burden on the lowest paid would be about 20%, on the average earner, about 40%, and on very high earners as much as 70% (although the cynic in me suspects that they are unlikely to be paying anything like that much!)
There also myriad benefits for the lower paid and others who qualify (e.g. families with young children, disabled people, etc) – such as child allowance, working tax credit, child tax credit, free school meals, housing allowance carers allowance, etc. So the actual tax burden on the lowest paid people, especially if they have children, will be less.
It’s been quite an education finding all this out (or ‘researching’ as it’s known in these internet days!). Our system is still a long way from perfect (there are a surprisingly large number of people still living in or near poverty in the UK, for instance), but I hadn’t realised just how relatively progressive it is.
(NB: I may easily have got some of the above wrong – tax legislation is constantly changing and my maths isn’t what it was.)
Speaking of Kecel:
Kecel is one of the numerous towns where there is no public (in the US sense) school any longer. The only public school was given to the Catholic Church in June 2011. If you are not an observant Catholic, you have to send your child 20-30 kilometers away by bus.
Since parochial schools get 70-90% more money per student from the central government than public schools, and the local governments are starved of money, they were eager to transfer schools in the last few years.[Fidesz abolished the law that every town or village had to maintain at least one public school]
In the US churches have tax exempt status. This implies that they cannot participate in electioneering or they lose this status. It is a fine line…
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