Finance Minister Mihály Varga, in an interview with business news website Világgazdaság, said it was ‘unprecedented’ that while Budapest residents and businesses meet their tax obligations, the city’s mayor ‘ignores them’.

The so-called solidarity contribution is imposed on 724 cities, including Budapest, Hungary’s richest city, Varga said in the interview published on Saturday, adding that the tax was meant to aid the 1,800 localities that have a more modest tax capacity.

The minister noted a ruling by Hungary’s Supreme Court, declaring that Budapest could not be even partially exempt from its obligation to pay its taxes. Varga said if the Budapest city council failed to meet its obligations, the government ‘will follow the given legal provisions along the clear decisions taken by the judiciary’.

As regards inflation, Varga said the government estimates an average annual inflation rate of 5.2 per cent for 2024.

He said such a rate still carried risks, so it was crucial to keep inflation at bay and strive for sustainable economic growth.

The minister also said he expects to see substantial real wage growth this year along with a decline in interest rates, leading to rising retail sales.

He recalled that international estimates put Hungary among the fastest-growing EU countries this year, adding that the government put this year’s GDP growth at 3.6 per cent. He noted that therefore he considered it ‘realistic’ for the government to pay another pension premium in November.

Concerning Hungary’s EU funds, he said the country had received 520 billion forints’ (EUR 1.4bn) worth of EU money by 17 January and the government was now working on unlocking the remaining funds. Hungary last year received 2,2 trillion forints’ worth of EU funds and expects to receive at least 2 trillion this year, he added.

Minister Varga said the 2024 budget’s figures could probably be maintained, but may be amended if it becomes necessary later in the year. He said the 2025 budget and tax changes will be passed in the spring.

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Sources: Hungarian Conservative/MTI