Fiscal Consolidation in Hungary in 2010–13
DOI:
https://doi.org/10.15678/AOC.2015.1303Keywords:
fiscal consolidation, public finance, public debt, tax system, financial crisis, HungaryAbstract
The purpose of this paper is to identify the fiscal consolidation methods implemented in Hungary in 2010–13 and to gauge whether adjustments on the expenditure side or on the revenue side had the greater influence on improvements in the budget balance and reduction in the public debt. The chief aim of Viktor Orbán’s government is to restrict the public debt. The instrument that was to achieve this was the Széll Kálmán plan for structural reform, which at its current stage of implementation has contributed little to improving the state of the public finances. The paper concludes from the presented evidence that the reduction in the budget deficit brought about by the consolidation measures is primarily the result of adjustments on the revenue side (increased rates of taxation, the introduction of new public levies). The paper takes the provisional position that consolidation has not proved an effective means of securing changes in the ratio of public debt to GDP.References
Act CIII (2011) “Törvény a népegészségügyi termékadóról” [Act on the product tax related to public health].
Act CXVI (2012) “Act CXVI of 2012 on the Financial Transaction Duty”. Hungarian Official Gazette, No. 98/2012, 23 July.
Act CXCIV (2012) “Act CXCIV of 2011 on the Economic Stability of Hungary”. Operative Regulations on the Fiscal Council, 25 April.
Alesina, A. F. and Ardagna, S. (2009) “Large Changes in Fiscal Policy: Taxes Versus Spending”. NBER Working Paper Series No. 15438.
Biuletyn (2012) “Biuletyn Ekonomiczny” [Economic Bulletin]. Department for the Promotion of Trade and Investment, Embassy of the Republic of Poland in Budapest, No. 7/2012.
Biuletyn (2013) “Biuletyn Ekonomiczny” [Economic Bulletin]. Department for the Promotion of Trade and Investment, Embassy of the Republic of Poland in Budapest, No. 12/2013.
European Commission (2007) “Public Finances in EMU 2007”. European Economy 3.
European Commission (2013) Cyclical Adjustment of Budget Balances. European Commission, Directorate General ECFIN Economic and Financial Affairs, Economic Databases and Statistical Coordination, Autumn.
European Parliament (2013) “European Parliament Resolution of 3 July 2013 on the Situation of Fundamental Rights: Standards and Practices in Hungary, P7_TA(2013)0315.
Financial Times (2013) “Hungary and the Price of Orban’s Phoney Wars”. Financial Times, 5 November.
Financial Times (2014) “Hungary’s Attacks on the Rule of Law and Why They Matter for Business”. Financial Times, 5 February.
Forbes (2010) “Zatwierdzono reformę emerytur na Węgrzech” [Pension reform approved in Hungary]. Forbes, 14 December, http://www.forbes.pl. Accessed: 10 March 2014.
Fundamental Law (2011) “The Fundamental Law of Hungary”, 25 April.
Government of Hungary (2011) Széll Kálmán Terv 1.0, Összefogás az Adósság Ellen, március.
Government of Hungary (2012a) “Report on Measures Taken in Response to the Council Recommendation of 13 March 2012 under the Excessive Deficit Procedure”. Government of Hungary, October.
Government of Hungary (2012b) A Következő Lépés, Széll Kálmán Terv 2.0, április.
IMF (2007) “International Monetary Fund Code of Good Practices on Fiscal Transparency”, http://www.imf.org/external/np/fad/trans/code.htm. Accessed: 27 March 2014.
Jankiewicz, G. (2013) Podatek od wypadków samochodowych i podatek od ubezpieczeń [Tax on car accidents and tax on insurance]. A Guide to the Market. Department for the Promotion of Trade and Investment, Embassy of the Republic of Poland in Budapest, http://www.budapest.trade.gov.pl. Accessed: 11 February 2014.
Ministry for National Economy (2011) “Hungary’s Structural Reform Programme 2011–2014 Based on the Political Thesis of the Széll Kálmán Plan”. Budapest: Ministry for National Economy, March.
Népegészségügyi termékadó (2013), http://www.nav.gov.hu/. Accessed: 10 December 2013.
Niewiadomski, A. (2011) “Partia Orbana doprowadziła do uznania partii opozycyjnej za «organizację przestępczą»” [Orban’s party ensures recognition of the opposition party as a “criminal organisation”], http://fakty.interia.pl/swiat, 30 December 2011. Accessed: 15 March 2014.
OECD (2014) OECD Economic Surveys: Hungary 2014. OECD Publishing, January.
Wprost (2013) “Orban obłoży jachty i zegarki 35-procentowym podatkiem?” [Will Orban impose a 35% tax on yachts and watches?” Wprost, 29 July.
“2013 – A Megújuló Magyarország Adórendszere, Adóváltozások összefoglaló”, http://www.kormany.hu, 27 November 2012. Accessed: 20 March 2014.
