The following is the editorial from the Budapest Business Journalʼs January 15 biweekly edition.
The New Year brings with it the hope of positive developments. It is a good time to think about the progress we would like to see. If we could make resolutions for Hungary and its leadership, they might be as follows:
A more transparent and predictable legal environment: This is not only our wish. Read any of the last few years of reports from credit rating agencies explaining why Hungary’s debt, yet again, will keep its junk status, and all of them mention the need for this improvement. One-off taxes on certain industries and other “unorthodox economic” moves have proven to do more harm than good, and the government has shown some indication that they understand this. A good example is the promise to reduce bank taxes and start treating the finance sector as a vital part of the economy, instead of a goose with an endless supply of golden eggs. Further predictability, and fewer sector-specific laws, like the ones currently dogging retailers, would be a big improvement. Better transparency would also mean a reduction in deals that appear to be enriching politicians or their families. Corruption is an ancient practice that flourished under Hungarian communism, and, at the very least, the current government sometimes gives the impression of taking it back to that level.
Reasonable tax rates: Hungary has some of the highest payroll taxes and value added taxes in Europe. Hungary also kept its deficit remarkably low in 2015, thanks to government appropriation of private pensions and better-than-expected tax collection. This indicates there is room for a reduction in state levies, though a smaller deficit is not the only reason for such a move. Intelligent tax cuts can encourage business and limit the incentive to cheat on taxes – and both these factors have been proven to increase tax revenue. Avoiding the kind of exorbitant and pervasive levies that cripple the economy can be a win-win situation for business and the government.
An end to the Sunday closing law: The retail sector has been saddled with a perverse law requiring stores of more than 200 sqm to close on Sundays. The law was justified as a way to make sure shop workers can see their families, but it also clearly favors the CBA grocery chain, which is headed by a man who donates a lot of money to the ruling Fidesz party. Regardless of why this law went into effect on March 15, it was a bad idea. Retailers, shoppers and store workers have all expressed their opposition to it, and a referendum to dump the law would have already taken place if it were not for political wrangling to thwart the democratic process. Those in power may be able to protect the Sunday closings law, but they should remember that the majority of the country hates the idea, and they are also likely to hate the people who keep it alive.
Respect for refugees and other foreigners, and an end to politicking through fear and hatred: This is a big wish that covers a lot of ground. Just as the ruling party’s popularity was foundering, the refugee crisis in Europe became big news, and the Fidesz government latched on to the opportunity to foment hatred. The prime minister began making abominable, racist statements about Muslims and watched his poll numbers rise. Fences went up along Hungary’s borders, casting a chill on the openness that has been a sign of progress in Europe. The government’s fear campaign has included spreading dubious stories about terrorists recruiting among the same Syrian refugees who were fleeing terrorists. A January 12 proposal to allow for a “terror state of emergency” would permit broad rollbacks of our civil rights – including allowing the government to control the media more intrusively than it already does – for two months at a time. One can easily imagine this law being horribly abused in the two months leading up to a national election.
The changes wished for here would bring about a saner, more effective government that enjoys greater support of the people. It would be wonderful to see them put into effect, though for now, that seems like wishful thinking.