Hungarian Prime Minister Péter Magyar has unveiled a proposed budget for 2027, aiming to address significant tax and spending changes while targeting a deficit of 4.9% of the country’s gross domestic product (GDP). The announcement, which includes plans for expanded social benefits and increased public spending, had an immediate effect on Hungary’s currency, the forint, which showed signs of strengthening.
The budget proposal outlines a doubling of family allowances and an increase in the minimum monthly pension from 28,500 forints to 120,000 forints. Additionally, the government intends to continue the 13th-month pension and introduce the first weekly payment of the 14th-month pension. Public-sector employees are also set to benefit, with 677 billion forints allocated for salary increases affecting over 600,000 workers.
Healthcare and municipal budgets are earmarked for additional funding, with 510 billion forints allocated to healthcare and another 64 billion forints to municipalities. Road maintenance and pothole repairs will be addressed through a 100-billion-forint program, and the solidarity contribution will be reduced by 62 billion forints.
On the taxation front, the government plans to reduce the personal income tax rate from 15% to 9% for earnings up to the minimum wage starting January 1. However, proposed changes to tax exemptions for mothers have sparked criticism, particularly from Fidesz politician Balázs Orbán. The new measures would introduce an income ceiling of one million forints per month and exclude certain mothers over 40 with two children from the benefits, a move Orbán claims was influenced by Brussels.
To support the proposed budget, the government expects to save 1,500 billion forints, implement a wealth tax to collect an additional 200 billion forints, and increase the corporate tax rate from 9% to 11% for companies with annual revenues exceeding 180 billion forints. Concession fees are projected to contribute an additional 246 billion forints in savings.
The budget proposal has stirred debate, with critics focusing on the potential impact of the new restrictions on existing family tax benefits. Orbán argues that the changes could adversely affect mothers over 40 with two children, who might lose the planned full income tax exemption, and younger mothers whose earnings exceed the specified threshold could face taxation on the excess income. The unfolding discussion highlights the balancing act the Hungarian government faces in implementing these fiscal measures.