Hungary’s Prime Minister Péter Magyar has introduced a bold 2027 budget proposal that aims to significantly alter tax policies and bolster social spending. Central to the budget is a targeted deficit of 4.9% of the country’s gross domestic product (GDP), reflecting substantial investments in social benefits, public-sector salaries, and healthcare. The Hungarian forint saw a brief strengthening following the announcement, though the long-term effects remain uncertain.
The proposed budget seeks to double family allowances and substantially increase the minimum monthly pension from 28,500 forints to 120,000 forints. It also maintains the 13th-month pension and adds the first weekly payment of a 14th-month pension. Additionally, the government plans to allocate 677 billion forints for public-sector salary hikes that would benefit over 600,000 employees, alongside 510 billion forints for healthcare improvements and 64 billion forints to support municipal budgets. A reduction in the solidarity contribution by 62 billion forints and a 100-billion-forint initiative for road maintenance and pothole repairs are also part of the plan.
On the tax front, the budget proposes reducing the personal income tax rate from 15% to 9% on earnings up to the minimum wage starting January 1. However, changes to tax exemptions for mothers are set to introduce an income ceiling of one million forints per month, potentially excluding certain mothers over 40 with two children from benefits.
To balance the budget changes, the government anticipates savings of 1,500 billion forints and aims to generate 200 billion forints through a wealth tax. The corporate tax rate would see an increase from 9% to 11% for companies with annual revenues exceeding 180 billion forints. Additionally, 246 billion forints in savings are expected from concession fees.
The budget has met with criticism from Fidesz politician Balázs Orbán, who argues that the proposed tax restrictions could undermine existing family benefits. He claims that the changes, which might affect mothers over 40 with two children by removing their full income tax exemption, and tax younger mothers on income above the threshold, are being introduced at the behest of Brussels.