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News > Hungary

Thousands of Hungarians Protest Against Overnight Tax Reform

  • People protesting against KATA reform, Hungary, July 13, 2022.

    People protesting against KATA reform, Hungary, July 13, 2022. | Photo: Twitter/ @Neur0tic

Published 13 July 2022
Opinion

Through this measure, the Orban administration seeks to increase state revenue by hundreds of millions of euros. The reform, however, might boost inflation.

On Wednesday, thousands of people took to Budapest's Kossuth Square in front of Parliament to protest against a legal reform that would significantly increase taxes for the self-employed and small businesses.

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In less than 24 hours, the parliamentary majority controlled by Prime Minister Viktor Orban approved on Tuesday an amendment that prevents small businesses from accessing the KATA, a flat-tax system whereby Hungarians pay a fixed monthly amount of taxes.

"I belong to the KATA, save me" was the motto raised by writers, messengers, lawyers, journalists, sports trainers, and other professionals who denounced that the tax reform will "ruin" the lives of at least 450,000 people.

The new legislation will enter into force in September, so those affected have just six weeks to adapt their companies and activities to the new rules.

Through this tax reform, the Orban administration seeks to increase state revenue by hundreds of millions of euros. This decision, however, might boost inflation since many companies and self-employed workers will have to increase the prices of their goods and services to compensate for the losses caused by the new tax regime.

Last week, the Hungarian Central Statistical Office (KSH) announced that the annual inflation reached 11.7 percent in June, setting a record high since October 1998, and up from 10.7 percent in May. The figure was substantially higher than the official target of 3.0 percent set by the National Bank of Hungary (MNB).

Despite the price cap on six basic food items taken by the government since the middle of January, food prices in June increased by 22.1 percent in June year-on-year.

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