Parliament met in extraordinary session, the prime minister spoke, and members of the Fidesz caucus didn't walk out. Gyurcsány made a forty-five-minute speech. Although we don't know the details of the plan, it seems that after consultation with leading economists, financiers, and businessmen, the government came up with a stimulus plan that aims to be revenue neutral. Two areas are off limits. First, the current structure of the pension plan will not change. Not only are oldsters an MSZP stronghold, but even in the population at large only about 10-15% of people surveyed suggested taking anything away from the pensioners. The government also doesn't want to touch the current practice of giving new mothers 70% of their earlier pay for two years. They are afraid of the criticism that they are not patriotic enough and aren't trying to increase the low birth rate. (Mind you, so far this program hasn't managed to boost the numbers of new little Hungarians.)
The focus of the plan is tax reform. The government will reduce personal income tax, business tax, payroll taxes, and social security. In addition, they will rescind an extraordinary tax paid by businesses and certain affluent individuals that was introduced a few years ago because of the sad state of the treasury. The government thinks that all these changes will amount to a loss of 1,000 billion forints in government revenue. So how can it offset this loss? The idea is to increase rates of certain categories of the value added tax and to try once again to introduce property tax. The introduction of a property tax is badly needed in Hungary because tax evaders often hide their wealth in real estate. There are all those tales about the "poor" entrepreneur who claims that he has such a modest income that he pays no taxes while he lives in a very expensive new house and also owns a fantastic summer place. The problem with introducing taxation on property is that it was about a month ago that the Constitutional Court deemed "luxury tax" (basically property tax) unconstitutional. According to the Constitutional Court the legislation provided no legal redress against the authorities' assessment. Moreover, it made no provisions for the current financial situation of the inhabitants. In plain language, let's assume that an older couple with two modest pensions are the owners of a valuable house they inherited from their parents. The property tax on a valuable piece of property might be as high as the couple's monthly income. Earlier the government tried to introduce a general property tax but it failed in parliament. I remember that Károly Herényi, leader of the MDF caucus, and he wasn't alone, proclaimed that the very idea of property tax is preposterous because it is effectively double taxation, and that's illegal. (A similar campaign has been waged against the capital gains tax in the U.S., so far to no avail.)
There would be one other change. Wealthier people would receive less child support, and in all instances the amount of child support would be added to people's taxable income. In addition, Gyurcsány mentioned a smaller parliament, a very popular suggestion, and fewer officials in fewer local governments. Of course, he knows as well as everybody else that without Fidesz's support these changes in parliament and administration will not materialize. If I were Gyurcsány, I would prepare proposals and submit them to parliament even knowing that Fidesz will not support them. At least this would make clear to the public which party refuses to spend less on running the country.
Fidesz's speaker, Tibor Navracsics, didn't really talk about the economic crisis and its possible remedies but kept repeating that Gyurcsány and the government should resign. Meanwhile Fidesz politicians refuse to reveal their own plans. Some people claim that in fact they have no plans. I disagree. I think that they have plans that are even more onerous than the ones the current government is planning to introduce. For example, I'm sure that Viktor Orbán and his team wouldn't hesitate to touch pensions. After all, his supporters are not the pensioners. Orbán made reference to that in his speech to young political scientists that leaked out a few months ago and that caused a serious erosion in Fidesz support. In it he made clear that he would include the thirteenth month pay in the amount received for twelve months and would peg pension increases only to inflation and not to the growth of real wages of the active population. Considering that between 1998 and 2002 when inflation was substantial the amount of child support didn't go up at all, I'm certain that Orbán and his team would not hesitate to save some money here too. So, all in all, Orbán doesn't want anyone to know the bitter truth. After Balatonőszöd he no longer can do what he did in 1998: promise the world and then not fulfill most of his promises. (The exception was the abolition of the ridiculously low tuition fees that Bokros introduced.) So it's best to be quiet. Very quiet as long as possible, and perhaps Fidesz supporters will believe in the magic touch of their leader who will be able to fix everything overnight. Unfortunately, Hungarians seem to believe in fairy godmothers–or in this case fairy godfathers.