Hungarian Prime Minister Péter Magyar has unveiled a proposed budget for 2027, aiming to reduce the country’s deficit to 4.9% of its gross domestic product (GDP). The proposed budget includes significant changes in taxation and spending, such as expanded social benefits, increased public-sector wages, and additional healthcare funding. These measures have led to a temporary strengthening of Hungary’s currency, the forint.
Key elements of the budget proposal include the doubling of family allowances and a substantial increase in the minimum monthly pension from 28,500 forints to 120,000 forints. Additionally, the 13th-month pension and the initial payment of the 14th-month pension are set to continue. The government has earmarked 677 billion forints for salary increases, which will benefit over 600,000 public-sector employees, and 510 billion forints to boost healthcare funding. Municipal budgets are also slated to receive an additional 64 billion forints.
Taxation adjustments form a crucial part of the budget plan. The personal income tax rate would be reduced from 15% to 9% for earnings up to the minimum wage, starting January 1. However, the proposal introduces changes to tax exemptions for mothers, setting an income ceiling of one million forints per month and excluding certain mothers over 40 with two children from benefits.
To finance the budget, the government plans to save 1,500 billion forints, collect 200 billion forints through a wealth tax, and increase the corporate tax rate from 9% to 11% for companies generating over 180 billion forints in annual revenue. An additional 246 billion forints in savings is expected from concession fees.
The budget’s provisions have sparked criticism from Fidesz politician Balázs Orbán, who argues that the proposed restrictions could weaken existing family tax benefits. He contends that mothers over 40 with two children might lose the planned full income tax exemption, while younger mothers could face taxes on income above the specified threshold. Orbán claims that these restrictions are a result of pressure from Brussels.