Property tax and the future of the pension fund in Hungary

I know that I wrote about both topics in the last couple of weeks, but unfortunately they don't want to disappear from Hungarian politics. The latest reverberation occurred this morning when a Fidesz old-timer, László Mádi, was sacked. I know that this is a pretty strong word but Mádi is one of the five original Fidesz politicians who have been serving Fidesz in the Hungarian parliament since 1990. As Tamás Bauer (SZDSZ), a former colleague and adversary, said this morning, "Mádi has been a faithful workhorse serving his party in the last twenty years." Yet a sentence he uttered yesterday at the meeting of the Organization of Hungarian Real Estate Agents and Assessors sealed his fate. He said that although in the near future the introduction of property tax is not feasible, in the long run after thorough preparation it can be introduced. This morning the assistant spokesman of the party, András Cser-Palkovics, held a press conference and announced that Mádi, who in the last few years entered parliament from the territorial list of Szabolcs-Szatmár County, had been removed from the roster.

I'm not sure about the legality of such a move because, after all, the party list was put together by the Fidesz Steering Committee and it is not at all clear whether Mádi's removal was sanctioned by the same body. I suspect that it was the decision of Viktor Orbán and some of his closest associates.

Mádi must have been shocked, and he tried to explain himself away by saying that he "was misunderstood." He is dead against the property tax. His denial was placed on www.fidesz.hu, but somehow I don't think that his explanation will wash. He violated party discipline. Apparently, even in more democratic parties discipline is of the utmost importance because, as Gábor Bruck, a former campaign manager of SZDSZ, said this evening on József Orosz's Kontra, an election campaign is like war. A party cannot allow any deviation from the party line. And that is what Mádi did. He couldn't even tentatively express his private opinion about possible future policy. This is true even though about six months ago in a book compiled by economists close to Fidesz there was an article by György Szapáry advocating the eventual introduction of property tax. Mind you, occasionally Szapáry says things he shouldn't, but with Mádi the situation is different. Mádi as a politician can be punished. Szapáry cannot. Or rather, Fidesz can say that an "independent" economist is not an official voice of the party. It cannot do the same with a member of parliament.

As for the Swedish pension model another Fidesz big gun, Mihály Varga (much bigger than Mádi), made a huge mistake. He indicated that Fidesz has been seriously thinking about introducing a pension plan that would be self-sufficient. The people who pay into that fund would get information about how much money had accrued in their accounts and thus they could gauge their future benefits. Of course, if the Hungarian government were to decide on the introduction of such a system it would have to be incremental. That is, the new system would be applicable only to those who are beginning their working careers now. Thus in no way would it affect the current pensioners. However, MSZP took advantage of the situation and muddied the waters by not making it clear that such a system would be fully implemented approximately forty years from now. Both parties began a huge campaign against the "Swedish model." Fidesz denied that it had ever even contemplated any change while MSZP tried to show that their current system is the very best and the pension fund as is can be maintained for at least forty years. Some people claim that this is most likely not the case and a reform of the pension system will probably be necessary. But Fidesz refuses to engage in any discussion of any reform in any field. Everything should be rolled back to the way it was before the Gyurcsány and Bajnai governments introduced the austerity program.

Basically Fidesz says nothing about their plans. No party program, no government program, just mega-posters with simple slogans: Hope, Success, It's Time, and Change. According to Hungarian political scientists that's the right strategy from the party's point of view. They are leading mightily and the less that is revealed of their plans the better. Especially if their followers don't demand specifics. Most people predict a hugh disappointment among Fidesz followers after the elections, and some of them gloomily add that the beneficiary of this disappointment will not be MSZP but Jobbik.

A liberal commentator said today on Klub Rádió, "we just have to get it over with." Because her favorite perfect party, SZDSZ, died, she is so disenchanted with politics that she has decided either not to cast a vote at all or to purposely invalidate her ballot by way of protest. That kind of attitude to my mind can only be counterproductive. In 1920 the social democratic party urged its followers to boycott the elections. That was their way of expressing their dissatisfaction with Hungarian politics that was shifting to the right. As a result, in the first parliament the party was not represented. Two years later, when they took part in the elections, they managed to have a sixteen-member caucus. The number of seats then was 282. It wasn't a huge delegation but considering that they could campaign only in the cities, it wasn't a bad showing.

As for "we just have to get [the Jobbik-Fidesz era] over with," this is the worst possible reaction to the current situation. When one hears devoted SZDSZ members talking like this, it is not at all surprising that SZDSZ is dead.

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Property Turkey
Guest

Great post. I enjoyed reading thanks.

Advice on Pension
Guest

Kudos to you for sharing this issue with us though we are not from Hungary. I believe pension issued from other countries also affects us locally.

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