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  • Writer's picture Kester Eddy

Protests against KATA tax law revision continue in Budapest

Demonstrations continued this morning in Budapest, with cycle couriers gathering on Margit Bridge before moving on to Kossuth tér, in front of parliament

Photo: Protesters gather on Saturday evening on the Danube embankment. Organisers claimed 4 - 5,000 taking part. That may have been true later, but I would doubt the numbers made 1,500 at this point, around 7.00 pm.

In case you didn't know, a whole gamut of folks are up in arms about the changes to the so-called KATA simplified tax system. Everyone from plumbers to lawyers is uptight about losing the option to pay a fixed HUF 50,000 a month to cover all their taxes and, though they cannot book any expenses against their income, they can pocket the rest.

Out of the blue last week the government tabled a bill on Monday, with parliament passing it on Tuesday, which effectively kills this system after September 1st because, from that date, on entrepreneurs using the KATA system can only invoice individual persons, not companies or corporate entities.

(There's one exception to this rule - taxi drivers in KATA can bill companies. Hmm, has someone remembered October 1990 and the infamous 'taxisblokád' after the Antall government denied there would be any fuel price hikes and then promptly broke that pledge?)

The changes mean that the vast majority of the 450,000 self-employed and micro-businesses that use KATA will have to revert to double-entry bookkeeping (if they can find a competent bookkeeper at an affordable rate, that is) or take on the time-consuming administrative work themselves to stay in business.

Passage of the bill sparked immediate, if largely well-behaved demonstrations every evening from Tuesday onwards, although protesters gave it a rest on Sunday, only to resume the campaign this morning, once again blocking traffic across Margit Bridge.

Photo: Something tells me there are a few here who won't be voting for their local Fidesz candidate in 2026. The poster, showing Hungarian Prime Minister Viktor Orbán and Russian President Vladimir Putin reads "Unacceptable!"

The government defends the change, saying unscrupulous companies (can you imagine such a thing, in Hungary?) are gaming the system by effectively employing freelancers in the KATA system, and thereby evading legitimate pension and social security payments.

There may, of course, be some truth in the claim, but then the protesters shout "Then nail the fraudulent companies, not us!"

Personally, I think in 2022, someone earning the maximum currently allowed in the scheme, that is HUF 1 million a month - about EUR 2,500 - should indeed be paying more than EUR 125 for the common good into the state coffers.

The answer to this conundrum is, of course, to have tax brackets, anything over, say, HUF 400,000 and you pay an additional sum of, say, HUF 20,000 per HUF 100,000 earned. But anyway, I'm not here to advise the government!

Meanwhile, protesters have included the modification to the household utility bill subsidies to their list of complaints. This will mean home owners will be paying the market price for gas and electricity if they consume more than the average energy usage of homes in Hungary. This is some hutzpah on behalf of the Orbán government, which claimed in its election campaign that this was the opposition's policy, while it promised the subsidised utility bills were a sacrosanct part of its own plans "to defend Hungarian families".

Photo: Give us a smile, Pete! Péter Márki-Zay, the common opposition candidate for prime minister in last April's general election, addresses the gathering on Saturday.

“Let’s stand together for those on KATA, for teachers, police, health care workers, pensioners and all those who the system reduces to poverty," Péter Márki-Zay, in a catch-all professions' appeal to garner everyman's vote next time round.

The conservative economist, would-be prime minister went on to say it took a less than a hundred days to reveal that everything the government claimed in the election campaign had been a lie, but then - like a neutral journalist trying to be even handed - had a dig at both the current and former Socialist PM Ferenc Gyurcsány, describing the government measures taken in the past week as Viktor Orbán’s “Öszöd Speech,” a reference to Gyurcsány’s notorious, expletive-laden talk that set off the violent 2006 protests.

Note: I've taken these quotes from Steven Nelson's Hungarian Politics blog. I was there at the time, but taking photos I couldn't take notes of the speeches.

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