Hungary’s Prime Minister, Péter Magyar, has unveiled a comprehensive budget proposal for 2027, aiming to address significant fiscal challenges while introducing major tax and spending changes. The proposed budget targets a deficit of 4.9% of the gross domestic product (GDP) and outlines measures that could reshape the country’s social and economic landscape.
The budget plan includes notable increases in social benefits, with family allowances set to double and the minimum monthly pension rising from 28,500 forints to 120,000 forints. In addition to continuing the 13th-month pension and the first weekly payment of the 14th-month pension, the government is committed to enhancing public-sector salaries and healthcare funding. An allocation of 677 billion forints for salary increases will benefit over 600,000 public-sector employees, while healthcare will receive an additional 510 billion forints. Municipal budgets are also set to grow by 64 billion forints.
In terms of taxation, the proposed measures include reducing the personal income tax rate from 15% to 9% for earnings up to the minimum wage, effective from January 1. However, the changes also introduce new limits on tax exemptions for mothers, with an income ceiling of one million forints per month and exclusions for certain mothers over 40 with two children.
To fund these initiatives, the government anticipates savings of 1,500 billion forints, alongside revenue from a newly introduced wealth tax expected to generate 200 billion forints. The corporate tax rate for companies with annual revenues exceeding 180 billion forints would increase from 9% to 11%. Additional savings of 246 billion forints are projected from concession fees.
The announcement has sparked criticism, particularly from Fidesz politician Balázs Orbán, who argues that the proposed tax changes could undermine existing family tax benefits. Orbán contends that the restrictions, reportedly suggested by Brussels, would weaken support for mothers over 40 with two children and impact younger mothers earning above the specified threshold.
Following the budget announcement, Hungary’s currency, the forint, experienced a strengthening. However, financial analysts suggest that these gains might be short-lived, as the long-term effects of the budgetary changes remain uncertain. The 2027 budget proposal thus presents a complex mix of fiscal strategies aimed at balancing economic growth with the need for social welfare expansion.
