Fidesz pow-wow in Gyula, February 5-7, 2013

On my Facebook page I discovered a note that István Vágó, the television personality, posted about a Tacitus quotation. In Latin it goes like this: “corruptissima re publica plurimae leges.” One doesn’t even have to know Latin to get the gist of the sentence. “The more numerous the laws, the more corrupt the government.” Well, well, perhaps Viktor Orbán should read Tacitus’s Annales in his spare time. The sentence in its entirety has even more relevance to Hungary: “And now bills were passed, not only for national objects but for individual cases, and laws were most numerous when the commonwealth was most corrupt.” “Bills passed … for individual cases”! Count the ways the Orbán government has resorted to this dubious practice.

More and more laws are being hatched with the greatest of ease and without any compunction. Just today Lajos Kósa, managing director of Fidesz, announced that the temporary provisions the Constitutional Court found unconstitutional can easily be remedied. “It is simple: the Constitutional Court didn’t accept our concept that there is a Basic Law and there are the temporary provisions. So, we just have to combine the two. Not a big deal.” This is how legislative work is being conducted in today’s Hungary.

Lajos Kósa made this statement in Gyula, close to the Romanian border, where the Fidesz-KDNP parliamentary delegation is holding a three-day meeting. Orbán is also attending this gathering. Earlier, the opposition forces announced a demonstration protesting the Orbán government’s policies to be held in conjunction with this meeting. A few hours later the Peace Marchers said that they would go to Gyula in support of the government. Indeed, busloads of pro-government sympathizers showed up from all over the country. They even came from Romania. I saw a sign indicating that the men and women behind the sign were from Oradea/Nagyvárad. As usual, the pro-government sympathizers were more numerous than the opposition forces thanks to the nationwide recruitment organized by so-called civic groups that by all indications are financially supported by the government. One of the organizers of the Peace March was Zsolt Bayer, the notorious anti-Semite who also wants to solve the Roma question “by any means.”

In the past few details of  these Fidesz pow-wows leaked out to the public, but it seems that party discipline is becoming frayed as difficulties mount. It doesn’t matter how often government officials repeat that the Orbán government’s almost three years in office “have been a success story,” fewer and fewer people believe the government propaganda. After all, according to the latest polls, 75% of the adult population of Hungary think that the country is heading in the wrong direction. It is thus not surprising that inside the Erkel Hotel where the meeting is taking place there were apparently a few tense moments.

A few hours after the commencement of the “retreat” the public learned quite a few details. By 7:00 p.m. Világgazdaság reported that Viktor Orbán had announced that the next governor of the Hungarian National Bank will be György Matolcsy after all. That piece of news sent the forint tumbling. The press department of Fidesz promptly issued a denial, claiming that Matolcsy’s name wasn’t even mentioned at the Gyula meeting. So, the forint stabilized. Hungarian analysts are still convinced that the next bank chairman will be Matolcsy, but they believe the bitter pill will be administered slowly over time to avoid a collapse of the Hungarian currency.

gas

By early morning today newspapers reported that there was “sharp disagreement” at the meeting over the lowering of utility rates. We’ve heard for some time that the state is planning to fix the price of natural gas. First they talked about a 10% reduction in the price across the board, but lately Fidesz politicians raised the stakes. János Lázár talked about a 30% reduction sometime in the future. And more and more promises were made: they will lower the price of water, fees for sewage, garbage collection, even the price of the compulsory cleaning of chimneys. Clearly, these ideas are preliminaries to the 2014 election campaign. It seems that Fidesz has decided to follow the bad old habit of paying off the electorate before the election and imposing austerity packages afterwards. In this same vein Fidesz politicians began talking about reintroducing a thirteenth-month payment for pensioners. Mind you, perhaps only once at the end of 2013. Perfect timing.

There are about 60 Fidesz-KDNP MPs who are also mayors, and in most of their cities the water companies are owned by the local government. The water companies at the moment are barely making it, and if the government forces them to lower prices they will go bankrupt. These politicians therefore argued for some kind of compensation from the central government. But, as we know, the government has no money. What new trick will they come up with to cover the cost of this generosity? One can only guess, but the Orbán government is exceptionally inventive when it comes to taxes.

Today the arguments continued. This time József Ángyán, former undersecretary in the Ministry of Agriculture, was on the offensive. He has been a severe critic of the Orbán government’s handling of the long-term leases of thousands and thousands of acres of government land; the leases were given to friends and relatives of Fidesz politicians. You can read more about Ángyán in a post entitled “Agricultural subsidies and the Fidesz oligarchs.” Orbán is really fed up with Ángyán. The only reason he hasn’t asked for his resignation from the party and from the Fidesz parliamentary delegation is because he is convinced that sooner or later Ángyán will resign on his own volition. Orbán stated, however, that he considers Ángyán “not worthy of the caucus of which he is a member.”

And finally, it seems that Viktor Orbán has given up his pet project: voter registration. After the Constitutional Court annulled the proposed law, Fidesz politicians for a while indicated that, although they would obey the ruling for the coming elections because of time constraints, they have every intention of changing the law after the 2014 elections. It seems that they have changed their minds. Why? I think because studies and polls indicated that registration might hurt Fidesz more than it helps.

Some people are convinced that Orbán might take advantage of this apparent defeat. After all, if registration had been deemed legal, no elections could have been held before 2014. Without that time constraint Orbán could call for early elections when the opposition is in total disarray. Knowing him, this scenario is a real possibility.

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gdfxx
Guest
gdfxx
February 6, 2013 7:31 pm

“But, as we know, the government has no money. What new trick will they come up with to cover the cost of this generosity? One can only guess, but the Orbán government is exceptionally inventive when it comes to taxes.”

They also own the printing machines, the ones that print forint banknotes.

ship ship
Guest
ship ship
February 6, 2013 8:22 pm

sinking ship but the captain keeps busy by arranging the deck chairs.
the passengers must throw the captains/captain overboard.

Guest
February 7, 2013 8:08 am

Skyping with an Hungarian friend yesterday, he said that even with the reduction in utility costs, Hungarians are still paying more than Germans–and their income is much less. I have no way to check on this. He stated Orban never does anything illegally–he just changes the law and then does it.

tappanch
Guest
tappanch
February 7, 2013 8:17 am

Re: taxes

Most banks started to collect Orban’s transaction taxes from February 1st.

I used my ATM card to get cash on January 31st, to no avail, the bank claimed that bookkeeping day was a day later, so they charged it.

In dollar terms, it looks like the maximum of [0.3% or $1]. So it is $1 even if you take out $5, and it is 0.3% if you take out more than $340.

tappanch
Guest
tappanch
February 7, 2013 8:28 am

The average net salary in Hungary is 142,000 HUF ($653) monthly, i.e. $7,836 a year.

The government will collect an extra $100 million (22 billion HUF) from taxing the salaries this way.

tappanch
Guest
tappanch
February 7, 2013 8:40 am

The average gross salary was $12,120 in 2012, so the government’s take was 35% with no personal exemption or standard deduction. There is flat tax here, gentle(wo)men.

tappanch
Guest
tappanch
February 7, 2013 9:02 am

In addition, Hungary has the highest VAT in Europe, 27% (18% on bread and milk). If you earn less than the average salary, i.e. you are in the majority slice of the population (since the median is smaller than the average), you will spend your full salary every month, so no matter how poor you are, you will pay 35%+27%+0.3%, i.e. more than 62% of your salary straight to Orban’s government.

tappanch
Guest
tappanch
February 7, 2013 9:15 am

Let me correct the 62% number:

35.35%+ 27%*65.65%+ 0.3% = 53.1% [minus 9% of the money spent on bread and milk] go straight to the central government.

tappanch
Guest
tappanch
February 7, 2013 9:22 am

I apologize, the right formula is 35.35% + 27.3%*65.65% = 53.27%

tappanch
Guest
tappanch
February 7, 2013 9:32 am

So if I earn 100 forints, my disposable income is 47 forints, while the government gets 82 forints (53 forints from me and 29 forints from my employer).

http://www.vallalkozas-okosan.hu/munkaber_adok_es_jarulekok_2012

Lipisssg
Guest
Lipisssg
February 7, 2013 9:45 am
Gretchen: it is probably difficult to understand for Hungarians (even to educated people), that the fact that Hungarians (Romanians etc.) earn less than Germans, does not affect the price of energy, whether it is natural gas, electricity, gasoline whatsoever. This is because input costs of energy are the same everywhere (ok, leave out the subsidised fuel in Iran or the Kingdom of SA) as oil, natural gas, machinery from which a power stattions could be built cost the same everywhere. So citizens in poorer countries have to pay the same price which seems expensive and even to educared people unfair. This thinking is not susceptible to rational analysis, its personal, “I have less money so I am entitled to cheap energy. Its in the pipes, its available, why do I pay so much?”. I doubt that the German prices are cheaper, but in any case Hungarian prices are very far from being expensive relative to EU peers (it is certainly not enough to incentivize electricity producers to invest). (Note that VAT is much higher than in many countries and obviously as a much smaller puchaser, 1/10th of Germany, we pay a somewhat higher price for natural gas; in addition, the… Read more »
An
Guest
An
February 7, 2013 9:46 am

@tappanch: Beautiful… Orban&co is robbing the country blind. The political ruling class accumulate wealth and capital on the back of the taxpayers (and on the back of the EU ), as most of the state money is going to Orban’s business buddies. Of course, most of the burden falls on the poor.

Capitalism, Hungarian style.

Thanks for sharing this.

tappanch
Guest
tappanch
February 7, 2013 10:16 am

The Catholic priest of Kecel speaks against the Fidesz mayor and his “gang” for not working for the community but for themselves.

His language is stronger than that of most opposition politicians:

Ron
Guest
Ron
February 7, 2013 10:34 am

tappanch :
So if I earn 100 forints, my disposable income is 47 forints, while the government gets 82 forints (53 forints from me and 29 forints from my employer).
http://www.vallalkozas-okosan.hu/munkaber_adok_es_jarulekok_2012

You mean 29% is Social Security, which suppose to be yours and not your employer. But you forget Training Fund Contribution, EHO and special tax for the employer if he does not have the minimum required disable persons working for him.

On top of that the employer needs to pay Personal Income Tax, Social Security on various expenses, such as mobile phone, use personal car for company, part of public transport and various representation costs. Furthermore, some part are no even deductible as company expenses for Corporate Tax and Local Business Tax.

Member
February 7, 2013 10:50 am

tappanch :
The Catholic priest of Kecel speaks against the Fidesz mayor and his “gang” for not working for the community but for themselves.
His language is stronger than that of most opposition politicians:

This is fantastic!

The vicar’s name is Roland Buranyi. He banished the major, Ferenc Taszilo (“and his gang”) from all Catholic institutions in the city for going to report him to the archbishop of the Kalocsa archdiocese.

In the homily he lashed out several times at the Fidesz major and his cohorts citing lot’s of undeniable facts.

Ron
Guest
Ron
February 7, 2013 10:59 am

Lipisssg: I think you are right in your assessment. However, I just received the new bill (with 10% reduction). The total bill is not 10% lower, but approximately 6%. Reason the fixed rights went up due to maintenance costs.

Talking about maintenance costs. Family lives in Budapest in the panel flats, and last summer they received isolation. It really has a major impact on the usage. Actually, they did not switch on the heating radiators whatsoever as the pipes were warm enough to heat the entire flat.

But it had no impact on their bill.

tappanch
Guest
tappanch
February 7, 2013 11:22 am

Ron :

tappanch :
So if I earn 100 forints, my disposable income is 47 forints, while the government gets 82 forints (53 forints from me and 29 forints from my employer).
http://www.vallalkozas-okosan.hu/munkaber_adok_es_jarulekok_2012

You mean 29% is Social Security, which suppose to be yours and not your employer. But you forget Training Fund Contribution, EHO and special tax for the employer if he does not have the minimum required disable persons working for him.
On top of that the employer needs to pay Personal Income Tax, Social Security on various expenses, such as mobile phone, use personal car for company, part of public transport and various representation costs. Furthermore, some part are no even deductible as company expenses for Corporate Tax and Local Business Tax.

The government is supposed to set aside 10 forints towards your retirement, 4 for the health care, 1.5 for unemployment benefits. That leaves 66 out of 82 taxpayer forints to spend on itself.

Paul
Guest
February 7, 2013 11:22 am

tappanch :
Re: taxes
Most banks started to collect Orban’s transaction taxes from February 1st.
I used my ATM card to get cash on January 31st, to no avail, the bank claimed that bookkeeping day was a day later, so they charged it.
In dollar terms, it looks like the maximum of [0.3% or $1]. So it is $1 even if you take out $5, and it is 0.3% if you take out more than $340.

Do you mean a maximum of 0.3% and a minimum of 1 dollar?

And why in dollars?

Paul
Guest
February 7, 2013 11:27 am

tappanch :
In addition, Hungary has the highest VAT in Europe, 27% (18% on bread and milk). If you earn less than the average salary, i.e. you are in the majority slice of the population (since the median is smaller than the average), you will spend your full salary every month, so no matter how poor you are, you will pay 35%+27%+0.3%, i.e. more than 62% of your salary straight to Orban’s government.

In the UK we have a variety of ‘essentials’ that either aren’t subject to VAT or to a lower rate (e.g. takeaway meals, food in general, baby clothes, newspapers and books are (I think) VAT free, and for electricity and gas the rate is only 5%), so, although VAT is an evil tax, it doesn’t hit the poor quite as hard as it otherwise would. Is there not something similar in Hungary?

Paul
Guest
February 7, 2013 11:29 am

Also, is there not a tax-free element of salary – e.g. the first 500,000 isn’t taxed?

Ron
Guest
Ron
February 7, 2013 11:57 am
Paul : tappanch : In addition, Hungary has the highest VAT in Europe, 27% (18% on bread and milk). If you earn less than the average salary, i.e. you are in the majority slice of the population (since the median is smaller than the average), you will spend your full salary every month, so no matter how poor you are, you will pay 35%+27%+0.3%, i.e. more than 62% of your salary straight to Orban’s government. In the UK we have a variety of ‘essentials’ that either aren’t subject to VAT or to a lower rate (e.g. takeaway meals, food in general, baby clothes, newspapers and books are (I think) VAT free, and for electricity and gas the rate is only 5%), so, although VAT is an evil tax, it doesn’t hit the poor quite as hard as it otherwise would. Is there not something similar in Hungary? There used to be, but was abolished by either VO,Medyessy or GY. I believe it was GY, but I am not certain. Now most products and services are 27% and some are 18% and a very few are 0% (school and hospital things). As to the tax free part of salaries, was abolished… Read more »
Kingfisher
Guest
Kingfisher
February 7, 2013 12:13 pm

No, there is tax on the first forint earned.

Bowen
Guest
Bowen
February 7, 2013 12:26 pm

Paul :
Also, is there not a tax-free element of salary – e.g. the first 500,000 isn’t taxed?

Not in Hungary, no. It’s a ‘flat tax’. You are taxed at the same level whether you earn 10,000 Ft a year or 10 billion.

An
Guest
An
February 7, 2013 12:28 pm

Paul :
Also, is there not a tax-free element of salary – e.g. the first 500,000 isn’t taxed?

There used to be, but with the flat tax they got rid of it.

tappanch
Guest
tappanch
February 7, 2013 12:31 pm

Paul :
Also, is there not a tax-free element of salary – e.g. the first 500,000 isn’t taxed?

The Orban government heralded as a big achievement that they did away with the “jóváírás”, i.e. reimbursement for the poor at tax time.

VAT in Hungary
5%= medication, baby formula, printed newspapers & printed books
18% = bread and milk from a grocery store
27% = all other food stuff, heating, electricity, clothing, e-books & everything else

tappanch
Guest
tappanch
February 7, 2013 12:58 pm

Correction: the VAT on district heating is also 5% since January 2010.

tappanch
Guest
tappanch
February 7, 2013 1:07 pm

From January 1, the heating bill is supposed to go down by 10% by Orban’s order, but the district heating company in Budapest started to charge extra for fixing a pipeware problem. In the past, repair costs were included in the maintenance part of the bill.

tappanch
Guest
tappanch
February 7, 2013 2:18 pm
Paul
Guest
February 7, 2013 3:44 pm

I am staggered by this – tax levied from the first forint? It doesn’t seem possible that any government, even Szent Orbán, can get away with this.

I’ve always said (in connection with the UK specifically, but generally as well), that the fair thing for a government to do in times of ‘austerity’ is to increase tax, not cut benefits. But, not only does this not work if, like Orbán, you’ve already got the poor paying tax, but also I can’t see how he COULD raise any more tax!

I hadn’t realised until now just how insane his economic policies are. I knew they were daft, but not this crazy.

Paul
Guest
February 7, 2013 3:51 pm

Paul :

tappanch :
Re: taxes
Most banks started to collect Orban’s transaction taxes from February 1st.
I used my ATM card to get cash on January 31st, to no avail, the bank claimed that bookkeeping day was a day later, so they charged it.
In dollar terms, it looks like the maximum of [0.3% or $1]. So it is $1 even if you take out $5, and it is 0.3% if you take out more than $340.

Do you mean a maximum of 0.3% and a minimum of 1 dollar?
And why in dollars?

Just upping this again, in case it got missed. An answer to this would be appreciated (in order to support my vain, one man, attempts to counter my Fidesznik relatives!).

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