The Orbán government’s latest “unorthodox solution”: A unique toll system

The Hungarian public is fixated on everything related to cars and driving, especially when it’s a question of money. Announcements about gasoline prices are daily fare in Hungary. If the price of gasoline goes up or down a couple of forints, it’s big news. Hungary is a poor country, we must not forget. Perhaps the most serious crisis since the change of regime occurred when it was announced that gasoline prices would have to be raised substantially. A blockade of all roads nationwide by taxi drivers paralyzed the country for three days and forced a government retreat.

Therefore it’s mighty strange that the Orbán government, already under considerable domestic and foreign pressure, decided to introduce a new toll system–and a badly designed one at that, which is bound to encounter serious opposition.

The system is geographically based. Each county, and there are nineteen of them in Hungary, is a separate toll unit. A driver who plans to drive on a toll road but strictly within the confines of his county need purchase only a single “matrica/vignette.” A few decades ago that might have been reasonable. A trip from Pécs to Harkány was considered to be quite a journey, and going to Hosszúhetény was an outright adventure. But these days, even with lower gasoline prices, people with cars are a lot more mobile.

The maps the government provided to make car owners’ lives easier are confusing. Some of them even had mistakes. If I figure it right, a person driving from Budapest to Pécs on the relatively new superhighway will need four matricas. Admittedly, the new county matricas are a great deal cheaper (5,000 Ft. each) than the former pass that was good for the whole country at 42,980 Ft/year. But what a hassle to figure out what counties you’re going through each time you plan a trip and which passes you’ll have to buy before you venture outside your own county. Even worse, think about those occasions when you have to get somewhere quickly–a family illness, a business emergency, the funeral of a colleague. You don’t just gas up the car and go. You also have to make sure you have the appropriate passes.

Let’s take a not too far-fetched example. A businessman who travels frequently from Pécs to Budapest will have to buy three or four matricas. And let’s say his family also wants to visit an aunt in Somogy or in Zala. The expenses start adding up.

The suspicion is that the government eventually wants to stop issuing those matricas that are good for a limited period of time. They are handy when the family goes on holiday to Lake Balaton or the Mátra Mountains. For ten days they pay only 2,975 Ft.; for a month, 4,789 Ft.

Drivers had to purchase their matricas by January 1, but as of December 29 no matricas were yet available. The new system was introduced in a great hurry without adequate preparation, as even Gergely Gulyás, the honey-tongued Fidesz politician, had to admit. By Friday (January 2) the computer system handling the issuance of matricas at gas stations crashed. There were long lines of people standing in the cold and rain in front of the headquarters of the office that takes care of the country’s roads. Purchasing passes online was not any easier because the site couldn’t handle the traffic.

And confusion reigns. Csaba Hende, the minister of defense and a member of parliament for Vas County, is furious. Based on the information he received, he promised his constituents that M86, a road between Szombathely and Vát, was going to be toll free. Came the surprise the following day: anyone using this new road will have to get a county matrica.

Utpalyak

There are bits and pieces of roads–because this is what we are talking about–where the introduction of tolls makes no sense. Perhaps the most egregious example is the road to the Budapest Airport. A single trip a year to and from the airport would require a Budapester to buy a county matrica.

The attached map gives some idea of what I’m talking about. As you can see, M1 and M0 serve a very important function: to save Budapest from heavy thru traffic, mainly the thousands and thousands of trucks that cross the country toward the north, the east, and the south. It is hard not to notice that certain parts of a single highway are free while other parts are toll roads. The reason is that those sections marked in green were built with EU support, for the specific purpose of ridding Budapest of the heavy truck traffic that is environmentally harmful. The European Union demanded that these roads remain toll free. Well, on the map they are marked free, but the roads leading to these free sections are toll roads, so, contrary to EU intentions, truckers don’t get a free ride around Budapest. You may ask what the orange-colored sections signify. These three short sections are still within the limits of Pest County, but if you drive onto them, you must have a county matrica for Fejér County in the case of M1 and M7 or Nógrád County in the case of M3. The distances are small. The trip from Törökbálint to Pusztazámor, for instance, is only 17.3 km or 10.7 miles.

A civic group that already blocked the M1 and M7 superhighways for a minute in December is threatening the government with an ultimatum. They now promise a total blockade of all roads if the government does not withdraw the new county toll system by the end of February. They will also demand the resignation of the Orbán government. The organizer is Zoltán Büki, a businessman and Együtt-PM activist in the county of Nógrád.

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78 comments

  1. Re the weak Forint:

    I’m still wondering if this has been considered in prices for food and other things (electronics) or whether we will see price hikes everywhere soon …

    Re the toll:

    This is just another example of a “flat tax” where everybody pays the same amount – whether you drive a big expensive Mercedes (and I often wonder who can afford this type of car in Hungary …) or just a small Volkswagen – or even an old Lada …
    And there are many more examples of this kind of flat or maybe proportional tax – while in most democracies taxes are progressive …
    For a party that claims to represent the people this is really ludicrous – like the flat income tax etc.
    Only those bloody foreigners like RTL have to pay special taxes …
    I’ve written several times on this topic on pol.hu:

    Robbin’ Orbán’s motto: Steal from the poor to give to the rich!

    Are the “regular people” in Hungary really happy with this?

  2. lajcsika
    January 5, 2015 at 2:10 am
    The reason for the tax is the significantly decreasing excise tax/VAT on gasoline (as the underlying price of oil has decreased). This is a substitute, though an idiotic one in every sense.

    You are saying that when the gasoline prices will go up the government will pay for Hungarians to use these roads?

  3. Dunno how they expect the foreign lorry drivers and tourist. The benefit for whom the eu money was given, to make any sense of this and probably more will simply not pay

  4. Just a little shout out to PM Orban for his recognition by the Organized Crime and Corruption Reporting Project (OCCRP). The OCCRP has declared Hungary’s Prime Minister Viktor Orbán as the second most corrupt politician of 2014 according to an analysis of the Organized Crime and Corruption Reporting Project (OCCRP). The “winner” is Russia’s President Vladimir Putin, while the third person on the list is Montenegro’s Prime Minister Milo Djukanovic.

    Good job OV, we are proud.

  5. @Istvan

    I think the ranking is right and realistic. And that is without knowing much about the biggest deals. Journalists are only scratching the surface of the MET deals, there isn’t much on Olajterv, there’s almost nothing on Paks 2, there is a total silence about the pre-arranged public procurement deals, there’s minimal info on the looting of the National Bank of Hungary and so on. Snippets and tidbits appear here and there, but nobody talks about the serious stuff, including Fidesz’ unfettered influence within the judiciary and prosecution. Fideszniks do leak political rumors but there’s no leakage about serious deals and about the operation of the system.

    by the way, I like the new guy president Janos Ader appointed as a sustainability advisor. He is an IMO graduate silovik. Did Áder think about him or Orban wanted to appoint somebody reliable to watch Áder? Not that Áder wouldn’t be a 100% Orban loyalist, but it’s better safe than to be sorry.

  6. As far as I can see the situation is not quite as u imagine. The weekly, monthly and yearly e-vignette that were previously available cover use of all toll roads in Hungary (for regular nationwide travellers and tourists). The countywide vignette covers all toll roads within one county (for one year duration). The bugbear is the the toll roads no longer just include the motorways but all the major roads that criss cross Hungary, so for someone who never used motorways to travel, either nationwide or county-wide, say even to get to the next village and back, will find that they have to pay.

  7. @Ron, Gretchen, Marcel Dé

    Thank you for missing me!

    1.
    I returned from the country of Batz, Aramitz, Portau & (the fourth name would give away the puzzle) a few days ago. Internet connection had been intermittent. Where was I?

    2.
    I have been watching the PLN/HUF ratio. It reached 75 at the end of September. It is 74.1 now. When it goes well over 75, the market will have made a judgment over the economics of the Orban government.

    The current USD/HUF = 266.5 rate shows the expected rise of the US interest rates and the sagging European economy in general, while the EUR/HUF= 318.3 shows a general fear of the European periphery, which includes the probable euro defector Greece.

  8. @tappach: Nice to have you back.

    According to the riddle you were in Gascony in France, the land of Dumas.

    As to the exchange rate I believe that the “good” figures at the end of December were caught up with the bad figures of December published in January.

  9. As to the toll roads, although it is early to say,

    I believe that lots of people leave their car at home. So far no traffic jams whatsoever in Bekasmegyer/Megyeri Hid. this point was notorious till Christmas for traffic jams.

  10. @Ron

    Almost good solution. The word “Gascony” is widespread, but not precise. The country is called Béarn, the birthplace of Henri IV (“Paris vaut bien une messe”), the three real-life musketeers and king Carl Johan of Sweden (a.k.a. Jean Bernadotte).

  11. Hungarians are asking for all this shit! and they still don’t have enough! i used to feel sorry for them but now??? naaaaaa! fool me once, shame on you. fool me twice, shame on me!!! they still don’t get it…well, i wish them more of those…anyway, all the huns with a brain who have the possibly to leave, are leaving…soon, Orbanisztan will be left with fideszes and jobbik aficionados !

  12. @tappanch

    re gambling, you forget our dear Andy. I read somewhere that he doesn’t even have a permanent Hungarian address, but never mind, he’s done great services to influential people.

  13. @tappanch the EU has been engaged in quantitative easing for a while. My guess is that Hungary has been doing the same. There were hints of HUF manipulation at year end to meet certain targets. Apparently the target was 314. Now that this has passed my guess is to slowly drive it further towards 325. Maybe to ruduce the cost of all theses “expensive” bonds? No matter, the bigger issue are those still outstanding 150,000 bad mortgages. That has completely frozen everything.

    As for the BMW comment, there is a lot of money in Hungary. That said, it’s very unevenly distributed. I’m not sure that tax rates will make that big a difference in wealth distribution. The markets here are so highly manipulated and the financial industry in Hungary in general has been so badly damaged that there aren’t very many good options to help balance out the wealth distribution problem. From my perspective, it’s Romania, Poland, Estonia, and Lithuania that are attracting the types of investment needed to build a strong middle class.

  14. Regarding the idea that a lower forint will mean a forintisation of Hungarian debt, I don’t see many investors buying Hungarian bonds (at least, not at a reasonable interest rate) priced in forints while there is a government in place that is obviously actively debasing the currency. Case in point, a few years ago the government had a large sale of bonds to pay off the IMF, and they were all priced in foreign currencies, and at higher interest rates than the IMF loans (but relatively low by Hungarian bond standards). Now that the EU “periphery” has become a no-investor’s land and US bonds will probably soon start bearing higher yields, I don’t see Hungary being able to sell many bonds at all. On the other hand, the government seems to be able to raise revenue at will with no significant squawking by taxpayers, so maybe that will attract some foreign investment, especially from the East.

    One short-term boost that I have personally witnessed is a strong trickle of money flowing in from Russia, to avoid the rouble’s nosedive and the expected capital controls that follow. In a small country like Hungary, that could make a big difference,

  15. googly, the first Treasury Bill of the year issued by Hungary for a 10 week period was a success and the average yield was 1.94%. Calculating roughly for an entire year it would mean around 12%. While the forint interest rates remain unchanged for the rest of the year (Matolcsy pledge), the rest of the world is changing quite rapidly. I wonder if he can keep his pledge.

  16. The composition of the gross debt of the central government:

    2010-11-30: 45.1% not forint-denominated
    2014-11-30: 38.0% not forint-denominated

    perturbation analysis:

    So a 10% decline of the forint against the euro would have resulted in an automatic 5.0% decrease of the debt in euro terms four years ago. [and a 4.5% increase in forint terms]

    Today, the same decline would yield a 5.6% decrease of the debt. [and a 3.8% increase in forint terms].

    So why not cause the forint decline by, say 30% against the euro?
    The new rate would be 416 HUF/EUR, and the government debt in euro would be shrunk by 17%.

    If Hungarians do not owe money in euro or Swiss franc any longer, this can be done.

    Of course, people (domestic and foreign) who put their money in 5-year forint bonds will lose a great deal.

  17. @Ron. As far as cold is concerned. What a coincidence. It is exactly -9C here too. As for Budaörs’s answer I heard the mayor last night announcing the town’s decision about lighting.

  18. Ron,

    Any information on who bought those forint bonds, Hungarians or foreigners? That 1.94% interest rate might not keep up with the exchange rate if things continue like this. Of course, there are investors from countries whose exchange rate might keep up with the forint (or fall against the dollar at a similar rate).

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