Hungary’s Prime Minister Péter Magyar has unveiled an ambitious 2027 budget proposal featuring significant changes in taxation and public spending, aiming for a deficit of 4.9% of the country’s GDP. The proposed budget includes expanded social benefits, increased salaries for public-sector employees, and additional funding for healthcare, alongside adjustments to income and corporate taxation. Following the announcement, Hungary’s currency, the forint, experienced a temporary strengthening.
Among the notable elements of the budget, family allowances are set to double, and the minimum monthly pension is proposed to increase from 28,500 forints to 120,000 forints. The budget also maintains the 13th-month pension and introduces the first weekly payment of the 14th-month pension. Salaries of more than 600,000 public-sector employees would rise, with an allocation of 677 billion forints, while healthcare funding would receive an additional 510 billion forints. Municipal budgets are earmarked for an extra 64 billion forints, and a 100-billion-forint program is planned to address road maintenance issues.
The tax reforms include a reduction in the personal income tax rate from 15% to 9% for earnings up to the minimum wage, beginning January 1. However, changes to tax exemptions for mothers introduce a new income ceiling of one million forints per month, potentially excluding some mothers over 40 with two children from benefits. This aspect of the proposal has drawn criticism from Fidesz politician Balázs Orbán, who argues that these restrictions could undermine existing family tax benefits. He also claimed that these measures were introduced at the behest of Brussels.
To fund these initiatives, the government anticipates saving 1,500 billion forints and plans to collect an additional 200 billion forints through a wealth tax. The corporate tax rate is proposed to increase from 9% to 11% for companies with annual revenues exceeding 180 billion forints. Further savings of 246 billion forints are expected from concession fees.
The budget proposal reflects Hungary’s strategic priorities and economic ambitions, but it has sparked debate over its impact on family benefits and the broader tax landscape. As discussions around these changes continue, the long-term effects on Hungary’s economy and society remain to be seen.