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Amendment would mandate state to levy tax to cover EU fines

Issues

An amendment to Hungary’s new Constitution submitted by MPs of governing Fidesz on Monday would mandate the state to levy targeted taxes to cover any payment obligations resulting from rulings by the European Court of Justice or Hungary’s Constitutional Court.

The taxes would be levied if payment could not be made by reallocating budget resources without breaking rules on prudent fiscal management. The mandate would remain in place until Hungary’s state debt falls to 50% of GDP.

The bill does not specify that the taxes should be levied before the payment obligation is met, an explanation of the bill noted.

Hungary’s new Constitution will come into force on January 1, 2012, thus the amendment would not affect an estimated HUF 272bn in VAT the state must refund companies by the end of 2011 under a ruling by the European Court of Justice in July.

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