Hungarian Prime Minister Péter Magyar has unveiled a proposed budget for 2027, aiming for a deficit of 4.9% of the country’s gross domestic product (GDP). The budget proposal features significant changes, including expanded social benefits, adjustments to taxation, and increased funding for public sectors, which have led to the strengthening of Hungary’s currency, the forint, albeit potentially temporarily.
Key elements of the budget include doubling family allowances and raising the minimum monthly pension from 28,500 forints to 120,000 forints. The government also plans to maintain the 13th-month pension and initiate the first weekly payment of a 14th-month pension. In addition, 677 billion forints are earmarked for public-sector salary increases, benefiting over 600,000 employees, while 510 billion forints are designated for healthcare enhancements. Municipal budgets would receive an extra 64 billion forints, and a road maintenance program is allocated 100 billion forints.
On the taxation front, the personal income tax rate would be reduced from 15% to 9% for earnings up to the minimum wage, starting from January 1. However, changes to tax exemptions for mothers are proposed, introducing an income cap of one million forints per month and excluding certain mothers over 40 with two children from the benefit.
The budget framework anticipates generating savings of 1,500 billion forints, collecting 200 billion forints through a wealth tax, and increasing the corporate tax rate from 9% to 11% for companies with annual revenues exceeding 180 billion forints. Additionally, concession fees are expected to yield 246 billion forints in savings.
Despite these plans, the package has faced criticism from Fidesz politician Balázs Orbán, who contends that the proposed restrictions could undermine existing family tax benefits. Orbán claims the new measures, potentially reducing tax exemptions for mothers over 40 with two children, are being introduced at the behest of Brussels. The changes could also lead to younger mothers being taxed on income exceeding the specified threshold.