Hungarian PM cuts local business tax; mayor protests

Hungary’s government will extend a moratorium on household and business loan repayments until July and halve a local business tax collected by municipalities, a move strongly criticized on Saturday by Budapest’s opposition lord mayor.

Prime Minister Viktor Orban announced that local tax for small and medium- sized businesses would be halved from January 1, 2021 to support jobs during the coronavirus crisis.

The local business tax is a vital source of revenue for municipalities. Opposition leaders said the tax cut would jeopardize public services and allow the nationalist government to exert political pressure on cities.

Orban said towns with fewer than 25,000 inhabitants would receive support from the government, while the financial situation of bigger municipalities would be “considered one by one.”

“Halving this tax does not manage this crisis, but deepens it,” Budapest’s lord mayor Gergely Karacsony, a liberal sociologist, said on his Facebook page.

The opposition amalgamated in October 2019 and handed Orban’s party its first major setback, wrestling back control of Budapest and some other big cities in a local municipal election.

Orban, in power for a decade, faces tough elections in 2022, fighting the effects of the pandemic against an opposition that has unified for the first time to unseat him.

The government projects gross domestic output will shrink by about 6 percent in 2020 as a result of the pandemic.