Hungarian protesters block Budapest bridges over planned tax hike
The government led by Prime Minister Viktor Orbán, who won his fifth and fourth consecutive term in April, has submitted amendments to the small business tax 'KATA' to Parliament on Monday, drastically tightening eligibility for the simplified tax regime. Hundreds of thousands of small firms opted into 'KATA' due to the low administration and low tax rate it offered.
The government argues that the system was abused by some businesses forcing workers into the scheme to curb their own costs, facilitating a form of covert employment.
The new rules are set to take effect in September, pending parliamentary approval. The tax had been due to raise HUF 237 billion in 2022.
Lászlo Zara, a tax advisor, said the changes affecting an estimated 400,000 to 500,000 small businesses could squeeze their overwhelming majority out of the revised scheme, with some 50,000 people remaining eligible.
This is clearly a tax increase, any way you try to frame it, a very large tax increase,
he told Reuters.
This will be inflationary because (small businesses) will not be able to reach their previous income levels, forcing them to raise prices, also raising inflation.
Hungary's inflation accelerated to 11.7% yr/yr in June and the 13.8% core inflation is among the highest in Europe.
About 1,000 demonstrators blocked Budapest's Margaret Bridge and a host of Wolt couriers blocked the middle lanes of Erzsébet (Elizabeth) Bridge with their scooters.
UPDATE (2.40 p.m.): The bridge is now open to traffic, as the couriers have withdrawn and regrouped on the Margaret Bridge.
Shortly after 2.30 p.m. the Budapest Transport Centre (BKK) reported that only the bus lanes can be used on the bridge due to the demonstration. Downtown Budapest is turning red on Waze's map due to the bridge blockades and the fact that Lánchíd (Chain Bridge) is currently under renovation.
MPs have today passed the new legislation that will leave hardly two months for 450,000 small businesses to figure out how to proceed. Opposition parties have united in saying no to the bill, warning of unwanted and unfavourable repercussions, but the governing parties have legislative majority.
