Hungary’s Prime Minister Péter Magyar has unveiled a significant overhaul in the country’s financial landscape with the proposed 2027 budget. The budget seeks to address a projected deficit of 4.9% of GDP, featuring expanded social benefits and alterations in taxation policies. The forint, Hungary’s currency, saw a brief appreciation following the announcement, though the long-term effects remain uncertain.
Key aspects of the budget include a doubling of family allowances and a substantial increase in the minimum monthly pension, from 28,500 forints to 120,000 forints. The budget also continues provisions for the 13th-month pension and initiates the 14th-month pension’s first weekly payment. Public sector workers stand to benefit from a 677 billion forint allocation, impacting over 600,000 employees. Additionally, healthcare funding is set to increase by 510 billion forints, with municipalities receiving an extra 64 billion forints.
The proposed tax reforms aim to reduce the personal income tax rate from 15% to 9% for earnings up to the minimum wage starting January 1. Changes to tax exemptions for mothers have sparked debate, as the introduction of a one million forint monthly income ceiling could affect eligibility, particularly for mothers over 40 with two children. Balázs Orbán, a Fidesz politician, criticized these modifications, suggesting they might weaken existing family tax benefits at the behest of Brussels.
To fund these initiatives, the government plans to implement a 200 billion forint wealth tax and increase the corporate tax rate from 9% to 11% for companies with annual revenues exceeding 180 billion forints. Additionally, the government anticipates saving 1,500 billion forints and generating 246 billion forints from concession fees.
While the budget proposal promises extensive reforms and increased spending in essential sectors, it has also drawn scrutiny and debate over its potential impacts on families and businesses. As the government moves forward, the effects of these changes on Hungary’s economy and social fabric will be closely monitored.