Hungarian Prime Minister Péter Magyar has unveiled an ambitious budget proposal for 2027, aiming to address economic and social challenges with significant tax reforms and increased spending. The proposed budget targets a deficit of 4.9% of the gross domestic product (GDP), with major allocations for social benefits, public-sector salaries, and healthcare.
Key elements of the budget include a substantial increase in family allowances, which are set to double, and a rise in the minimum monthly pension from 28,500 forints to 120,000 forints. The continuation of the 13th-month pension and the introduction of the first weekly payment of the 14th-month pension are also planned. Additionally, 677 billion forints are earmarked for salary increases for over 600,000 public-sector workers, while healthcare funding will see an increase of 510 billion forints. Municipal budgets are slated to receive an additional 64 billion forints.
On the taxation front, the proposal includes reducing the personal income tax rate from 15% to 9% for earnings up to the minimum wage, effective January 1. However, the budget also introduces changes to tax exemptions for mothers, setting an income ceiling of one million forints per month and excluding certain mothers over 40 with two children from the benefit.
To finance the budget, the government plans to implement a wealth tax expected to generate 200 billion forints, along with raising the corporate tax rate from 9% to 11% for companies with annual revenues exceeding 180 billion forints. Additionally, 1,500 billion forints in savings and 246 billion forints from concession fees are anticipated.
Despite the initial positive reaction from the financial markets, where Hungary’s currency, the forint, strengthened, the budget has faced criticism. Fidesz politician Balázs Orbán voiced concerns that the new restrictions could undermine existing family tax benefits, particularly affecting mothers over 40 with two children and younger mothers who might face taxes on income above the new threshold. Orbán also suggested that these changes were influenced by requests from Brussels.