Hungary’s Prime Minister Péter Magyar has unveiled a proposed 2027 budget aimed at maintaining a deficit of 4.9% of the nation’s gross domestic product (GDP). The budget introduces significant fiscal adjustments, including expanded social benefits, public-sector pay raises, and modifications to income and corporate taxes. Following the announcement, the Hungarian forint experienced a temporary strengthening.
The proposal features a substantial increase in family allowances and a rise in the minimum monthly pension from 28,500 forints to 120,000 forints. Additionally, the 13th-month pension and a partial 14th-month pension are set to continue. Public-sector employees are slated to benefit from a 677-billion-forint allocation for salary increases, affecting over 600,000 individuals. The healthcare sector is earmarked for an additional 510 billion forints, and municipal budgets are to receive a boost of 64 billion forints.
On the taxation front, the personal income tax rate for earnings up to the minimum wage is proposed to drop from 15% to 9% starting January 1. However, changes to tax exemptions for mothers will introduce an income ceiling of one million forints per month, potentially excluding some mothers over 40 with two children from these benefits.
To balance these expenditures, the government plans to implement savings of 1,500 billion forints, collect 200 billion forints through a wealth tax, and increase the corporate tax rate from 9% to 11% for firms with annual revenue exceeding 180 billion forints. Further savings of 246 billion forints are expected from concession fees.
The budget package has been met with criticism from Fidesz politician Balázs Orbán, who argues that the proposed tax restrictions could undermine existing family tax benefits. He claims that the changes, allegedly requested by Brussels, might lead to mothers over 40 with two children losing full income tax exemptions and younger mothers facing taxation on earnings above the set threshold.