Finance Minister Mihaly Varga – Photo: Facebook

Finance Minister: Budapest mayor’s refusal to pay city’s taxes ‘unprecedented’

Finance Minister Mihaly Varga, in an interview with the online edition of business daily Vilaggazdasag, said it was "unprecedented" that while Budapest residents and businesses meet their tax obligations, the city's mayor "ignores them".

The solidarity contribution is paid by 724 cities, including Budapest, Hungary’s richest city, Varga said in the interview published on Saturday, adding that the tax was meant to aid the 1,800 localities that have a more modest tax capacity.

The minister noted a ruling by the Kuria, Hungary’s supreme court, declaring that Budapest could not be even partially exempt from its obligation to pay its taxes. Varga said if the Budapest city council failed to meet its obligations, the government “will follow the given legal provisions along the clear decisions taken by the judiciary”.

As regards inflation, Varga said the government estimates an average annual inflation rate of 5.2 percent for 2024. He said such a rate still carried risks, so it was crucial to keep inflation at bay and strive for sustainable economic growth.

The minister said he expects to see substantial real wage growth this year along with a decline in interest rates, leading to rising retail sales.

He said international estimates put Hungary among the fastest-growing EU countries this year, adding that the government put this year’s GDP growth at 3.6 percent. He said he considered it “realistic” for the government to pay another pension premium in November.

Concerning Hungary’s EU funds, he said the country received 520 billion forints’ (EUR 1.4bn) worth of EU money by Jan 17 and the government was now working on unlocking the remaining funds. Hungary last year received 2,200 billion forints’ worth of EU funds and expects to receive at least 2,000 billion this year, he added.

Meanwhile, Varga said the budget’s figures could be maintained, but could be amended if it became necessary later in the year. He said the 2025 budget and tax changes will be passed in the spring.

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