An increase in the local business tax would raise revenue for the capital by HUF 40bn-45bn, Budapest mayor Istvan Tarlos said at a press conference on Monday.

Speaking after an amendment was submitted to Parliament that would raise the local business tax from 2% to 2.5%, Mr Tarlos said the city could use the extra revenue to finance its public transport company BKV.

If troubled BKV were to go bust, it would cause the Hungarian economy losses of HUF 14bn a day, not counting the company’s HUF 70bn stock of debt, he added.

Mr Tarlos said he had agreed with Prime Minister Viktor Orban that financing for BKV could only come from such sources as an increased local business tax.

The local business tax increase would become effective in February, he said. It still isn’t certain that it would have to be in place for the long term, but it would definitely be necessary for several years, he added.