Budapest faces bankruptcy if nothing happens: bank account shows HUF 31 billion deficit at Easter

According to Gergely Karácsony and his allies, the Hungarian government is robbing Budapest and the Budapesters by imposing a high, so-called solidarity tax on Budapest. Meanwhile, Orbán’s Fidesz believes Karácsony is unfit to lead the capital, which is why Budapest has financial problems.

Unbearable tax burden?

According to Népszava, a leftist Hungarian daily, Budapest’s bank account shows a deficit of HUF 31 billion (EUR 76 million) at Easter because the Hungarian State Treasury took the first instalment of the so-called solidarity tax. The tax aims to collect money from economically more developed local governments with higher incomes and distribute those financial assets between poorer settlements. The basic idea is that wealthier cities and towns help poorer villages and towns, which have no other income than what the state provides to develop.

Opposition-dominated local governments regularly complain because of the increasing amount of solidarity tax the government collects and say that it is how the Orbán cabinet tries to starve them. The government says they only collect more because the income of the local governments also rises. However, nobody understands the calculation they use to define the sum. Budapest, for example, regularly says that the governmental drain is unbearable and endangers the operation of the capital.

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According to Népszava, this year, Budapest should pay HUF 89 billion (EUR 217 million), and the first instalment was taken from its account by the Hungarian State Treasury, which is why its account is in a HUF 31 billion deficit. Ambrus Kiss, the director of the mayor’s office, said Budapest would live on overdraft until autumn, when the local taxes will be paid by the companies having their seats in the capital. The deficit would grow to HUF 60 billion (EUR 147 million) by then.

Budapest may face bankruptcy if the State Treasury takes the full tax

Interestingly, the 2025 budget calculates only HUF 39 billion (EUR 95.5 million) for solidarity tax, 50 billion less than what the government wants. That was the only way the capital could accept a balanced budget. Otherwise, it would have been calculated with a significant loss, which contradicts the relevant laws. Meanwhile, the Hungarian State Treasury left no room for negotiations in that regard in March, saying that they would take the full amount of the tax the government demands even if Budapest becomes bankrupt.

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In 2019, the last year of Fidesz-backed independent István Tarlós’s mayorship, Budapest had to pay only HUF 5 billion (EUR 12.2 million) as a solidarity tax. In 2024, that amount was HUF 75 billion (EUR 183.6 million). That grew to HUF 89 billion this year.

The number of settlements paying a solidarity tax and the amount of the tax are constantly rising. In 2020, the entire sum was HUF 58 billion (EUR 142 million). This year, the government wants to collect HUF 360 billion (EUR 881.5 million). In 2023, 724 localities had to pay, while in 2025, 855 settlements will have to transfer money.

Decreasing state support for local governments

It’s not only the capital city itself that is paying the tax, but also the districts. Apart from Budapest’s more than HUF 89 billion, the 23 districts pay another 73.3 billion (EUR 180 million) to the state budget. Budapest sued the government for the solidarity tax, but the court procedure is long, and the capital needs the money now.

Népszava wrote that the net support the Hungarian government provides for the settlements is decreasing nominally. The high inflation of the past 3-4 years exacerbated the situation, which is not expected to change in the next few years.

Fidesz group leader Szentkirályi: Tisza ‘unworthy’ to represent Budapest voters

MEP and municipal representative Kinga Kollár and her Tisza Party “have become unworthy to represent Budapest residents,” Alexandra Szentkirályi, the head of ruling Fidesz’s Budapest chapter, said on Facebook on Wednesday. Kollár and Tisza are “faithful to Brussels and unfaithful to Budapest”, Szentkirályi said. Kollár “works against the people of Budapest”, Szentkirályi said, adding that on top of her salary from the European Parliament, Kollár also drew income for being a local representative in Budapest.

“It is high time we fired her,” she added. Szentkirályi referred to Kollár’s “hair-raising” remarks in Brussels, and insisted that both the European Union and Tisza had admitted that they were aimed to “destroy the living standards of Hungarians”.

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