July 23, 2022

HUNGARY: Massive Protests For Nearly A Week Against A Tax Increase Goes Into Effect Sept 1 Will FORCE OUT The Majority Of Hundreds Of Thousands Of Small Businesses Who This Tax Measure Targets.

The Associated Press
written by Justin Spike
Monday July 18, 2022

BUDAPEST, Hungary — Anti-government demonstrators in Hungary blocked one of the capital’s main thoroughfares during morning rush-hour traffic Monday, the latest in a series of protests against recent changes to the country’s tax code that have carried on for nearly a week.

The crowd, made up largely of food delivery couriers on bicycles and scooters, blocked traffic in both directions on one of Budapest’s main bridges over the Danube River. Many demonstrators were independent entrepreneurs affected by legislative changes passed by Hungary’s parliament last week, which they believe will result in major tax hikes or a loss of work.

“Many of us came because we want change, we want unity. We want to live in a country where they don’t try to tear us apart and reinforce divisions,” said demonstrator Eszter Balazs, 25, a restaurant worker and law student.

The wave of demonstrations has taken an increasingly anti-government character since they began on July 12. Nearly nightly, thousands of protesters have defied police and marched through central Budapest, blocking roads and major intersections and demanding the retraction of the law.

Hungary’s ruling Fidesz party, led by nationalist Prime Minister Viktor Orban, used its parliamentary supermajority last week to pass the changes, which target a popular tax scheme known as KATA which allows small businesses and freelancers like delivery drivers to pay a low, flat tax rate.

The measures, which go into force Sept. 1, will force out the majority of the some 450,000 workers who use the scheme. Many demonstrators see the move as a hastily passed form of austerity on workers amid record weakness of Hungary’s currency against the dollar and euro and the highest inflation in nearly 25 years.

“I would really like to live in this country, but they’re making it impossible!” delivery driver Norman, 24, said through a megaphone. He would not give his last name.

“These people call themselves the great family-friendly government, the ones who are driving everyone out of the country?” he said.

The organizers, a spontaneously formed group of delivery couriers, asked opposition parties and “influencer politicians” not to appear at the demonstration. They promised further protests would follow on Tuesday and Wednesday, and other demonstrations were scheduled for later on Monday in the provincial cities of Szeged and Nyiregyhaza.

Eszter Balazs, the restaurant worker, said she believed the wave of discontent “will continue, and that we’ll be ever stronger and more enthusiastic.”

“We have to occupy bridges, we have to become a mass movement and show that we can cause change through unity because many Hungarians want change. There are many Hungarians that want things to be better for their families,” she said.

Hungarian Conservative
written by Zsรณfia Tรณth-Bรญrรณ, Online Editor of Hungarian Conservative
Saturday July 23, 2022

It looks like the Biden government may end up not being able to push its anti-growth tax cartel idea through anyway, beside finding that it is very difficult to coerce the Hungarian Prime Minister into doing anything that he does not feel coincides with the interests of the Hungarian people.

Albeit gratitude is not a political category, one may nevertheless fantasise about a world in which political actors at least do not stab allies in the back who have proved, time and again, to be reliable partners. There are some rare examples of countries that tend to express gratitude–if not necessarily in deeds but at least in rhetoric and in refraining from outright attacks–for the past deeds of Hungarian governments. To cite just two: Germany for Hungary’s allowing East German refugees to cross its border with Austria in 1989, or Poland for the numerous historical occasions on which Hungary stood by it.

The United States, which by the way has defined itself, although somewhat on and off, as Hungary’s “friend and ally” over the past decades, definitely falls into the populous category of the ungrateful, as, by the way, its number one protรฉgรฉ, Ukraine, but I already wrote about that here. Never mind that Hungary never wavered in supporting America after the 9/11 terrorist attacks, or that it consented to NATO using its territory during the bombing of Yugoslavia, despite its grave concerns for the safety of the ethnic Hungarians in Vojvodina. It is obviously considered natural and not a gesture of friendship that Hungary did sign the Defence Cooperation Agreement, and has not voiced objections to the rotational but clearly continuous presence of US troops in the country. Not to mention the recent large-scale purchase of US-made military equipment. “Defy me once, and I will crush you!” seems to be the motto of Democratic administrations. And defy Hungary did, when it made it clear it would not subscribe to shooting itself in the foot with a global minimum corporate tax of 15 per cent. So the United States Government has decided to resort to the ancient tool of coercion to get what it wants.

In an interview with Hungarian news website Index, foreign minister Pรฉter Szijjรกrtรณ remarked that Secretary of State Blinken had personally signalled it to him that should Hungary not support the global minimum tax, the US would terminate its double tax treaty with Hungary. Let us add – in a clear act of retaliation.

The Hungarian foreign minister said he had explained to Mr. Blinken that in Hungary there is a nine per cent corporate tax, which is the main reason why the country has kept breaking all investment records in the past eight years, attracting foreign capital primarily thanks to the favourable tax environment. If Hungary was to raise the corporate tax by six per cent, it would greatly harm the country’s competitiveness and would lead to the loss of a large number of jobs, the Hungarian foreign minister told his US counterpart. Antony Blinken apparently heard what Mr. Szijjรกrtรณ said, but underscored that the introduction of a global minimum tax was something President Joe Biden ‘has at heart’ and made it clear that if Hungary resisted the tax, the United States would abrogate the 1979 tax treaty between the two countries. (Let me ask a rhetorical question as a side note: I wonder why the politicians of large and powerful countries keep advocating for worldwide uniformity regarding taxes, regulations, ideologies etc., but never advocate for a global minimum wage?)

Mr. Szijjรกrtรณ also remarked the interview that the US government’s move propelled Hungary into the centre of a fierce US domestic debate, as ‘the Republicans also oppose the introduction of the tax, because they also believe it harms economic competitiveness. In fact, there are expert consultations on the topic between the Hungarian administration and the Republicans,’ the foreign minister said.

Mr. Szijรกrtรณ also noted that the American decision ‘will have no serious consequences on everyday business dealings,’ but it is likely that certain tax accounting procedures will become more complicated for those companies that operate and have revenues on the territory of both countries.

This is not the first time in the recent past that the United States has punished Hungary with a unilateral move. In 2014, the US found that ‘certain Hungarian private individuals’ and government officials became ineligible for entry to the US because ‘credible information’ was available showing that those persons ‘participated in or profited from corruption activities.’ The infamous visa entry ban scandal was quite obviously a tool to blackmail the Hungarian government, but it turned out to be more smoke than fire.

As far as the current coercion exercise is concerned, Mr. Szijjรกrtรณ was gentle enough not to point out the sheer hypocrisy behind the unfriendly move. But National Review reporter John Fund did, in his piece titled ‘Biden Keeps Tax Treaty with Russia, Terminates It with Hungary’, published on 12 July. Yes, mind-boggling as it sounds, it is true: the US government saw fit to end its 43-year-old tax treaty with Hungary, punishing an alleged friend and ally, and at the same time keep it with Russia, a country which otherwise is now its number one arch-enemy. As Fund puts it, the global minimum tax of 15 per cent for multinational corporations is in fact ‘being pushed by the Biden administration. As a member of the European Union, Hungary must give its approval before the EU can impose the new minimum tax.’ Ay, there’s the rub. Hungary, as an EU member state, can veto the Union’s joining the new tax regime.

However, there is probably another reason why the US government is playing hardball. As John Fund says in his article, Viktor Orbรกn ‘has been a thorn in Biden’s side for years. During the 2020 campaign, Biden singled out Orbรกn as a “thug.”’ However, Mr. Fund points out, ‘Orbรกn, unlike Vladimir Putin, is a freely elected leader, having just defeated a united opposition by 17 points in April.’ Mr. Fund noted that Biden is ‘on shaky moral ground’ by letting Russia keep its treaty while shutting down one with Hungary, ‘a formerly Communist nation whose opening up of its borders in May 1989 accelerated the end of the Cold War and the collapse of the Soviet Union.’

Mr. Fund also quoted Adrian Smith and Mike Kelly, two Republican House members on the Ways and Means Committee, as saying that Biden’s move will only add to the U.S.’s reputation as an undependable ally. The GOP representatives also highlighted that while Biden can negotiate a global minimum tax, Congress will have to enact legislation for the U.S. to be actually involved.

So it looks like the Biden government may end up not being able to push its anti-growth tax cartel idea through anyway, beside finding that it is very difficult to coerce the Hungarian Prime Minister into doing anything that he does not feel coincides with the interests of the Hungarian people. He was re-elected for the fourth time precisely because the majority of Hungarians trust him and expect him to always put the country first.
Daily News, Hungary local
written by Hetzmann Mercรฉdesz
Thursday July 21, 2022

While inflation is on the rise across the whole European Union, Hungary is also experiencing a marked deterioration in its currency. The annual inflation rate in the euro area rose to a new record of 8.6 percent in June, up from 8.1 percent in May. Meanwhile, inflation in the European Union as a whole rose to 9.6 percent from 8.8 percent in May, Eurostat said in a report published on Tuesday, according to MTI.

Inflation in EU

According to data from the EU’s statistical office, the rate of price increases in the euro area accelerated further for energy (42 percent compared with 39.1 percent in May); food, alcohol and tobacco (8.9 percent compared with 7.5 percent in May); and non-energy industrial products (4.3 percent compared with 4.2 percent in May). In services, on the other hand, the rate of increase eased marginally to 3.4 percent from 3.5 percent in May, Index.hu reports. The lowest annual inflation rate was in Malta at 6.1% and the highest in Estonia at 22%. Inflation fell in only two of the EU’s member states, but rose in the other 25 in June. Hungary’s inflation rate is the eighth highest among EU countries, along with Slovakia’s.

Inflation in Hungary

According to Eurostat data, annual inflation in Hungary – also based on the Harmonised Index of Consumer Prices (HICP), which is calculated for EU comparison purposes – was 12.6% in June, up from 10.8% in May. According to Eurostat data, annual inflation in Hungary – also based on the Harmonised Index of Consumer Prices (HICP), which is calculated for EU comparison purposes – was 12.6% in June, up from 10.8% in May.

Inflation forecast for 2023

The EU economy is forecast to grow by 2.7% in 2022 and 1.5% in 2023. The euro area economy could expand by 2.6 percent in 2022, but slow to 1.4 percent in 2023. Average annual inflation is forecast to peak at a historic high of 7.6 percent in the euro area and 8.3 percent in the EU as a whole in 2022, before easing to 4.0 percent and 4.6 percent respectively in 2023. By comparison, GDP growth in Hungary will fall from 7.1 percent in 2021 to 5.2 percent in 2022 and 2.1 percent in 2023. Average annual inflation rises from 5.2 percent in 2021 to 11.8 percent in 2022 and remains high at 7.6 percent in 2023.

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