2011. november 06. 07:00

Bane budget

As a politician I am not drawn to the use of strong expressions and superlatives: if you use these too often then they wear out and lose their credibility.  But in the case of the 2012 budget only using tough words would have most sense if we want to express the basis of it. This budget is a unique mixture of dilettantish and the impoverishment of Hungary. Next year’s budget will set the whole country and most of the households on a path to disaster.

The government is talking about a leap from the crisis, but the thing they are really leaping from is reality.  In addition what should they really be leaving behind is this budget and fast! This is where the problem of dilettantish arises from.  Hungary never before had a budget which before even taking effect more precisely on the 3rd day after being submitted flips. Nothing is the way like it is written in the bill.

There won’t be a 1,5 percent economic growth on which all other numbers of “conservative estimations” rely on. Significant economic workshops, including right –wing ones predict Hungarian economic performance in 2012 to be somewhere between 1, 5 and 0, 5 growth. The real danger of this shutdown, this recession is the budget itself which breaks every Hungarian austerity measure’s record.

Inflation would be higher than planned. For weeks now rates are way above the numbers desired by the budget.  The National Audit Office – which’s President you cannot suspect of being anti-Fidesz - has just found 400 billion Ft worth of saving which’s source is unknown.  Let me translate that for you: the ministry of economy’s planning method is like flipping a coin.
Contrary to the Prime Minister’s victory reports the net debt has risen during the year and the government – by the way – does not plan to significantly lower the amount of public debt next year, as it also does not count with decreasing the number of unemployment. Not to mention that the other day Zsigmond Jarai – another not typically oppositional expert – has claimed that even this year’s (!) budget might be in need of correction.

The other principle of the government’s fiscal policy: take one bad idea, stick to it and if situation becomes really untenable then add another bad idea to it so the mistake would not have to be admitted.  

The government’s starting point is the flat tax system which favours high-income and which was aided by a tax relief. So to replace the money lost from the budget this way, it inflicts a huge blow on low and average incomes by eliminates tax credits.  Then to compromise this it raises the minimum wage on which we would agree on if we wouldn’t know that with the tragic combination of minimal wage increase and the tax system those who are affected will more likely earn the same amount, but most will most probably lose money.

Fidesz who is flattering us with the prospect of growth is unable to move the economy forward.  The tax and revenue contributions needed to run public services do not exist. What does the pro-tax cut Fidesz do? Becomes the government of tax increase and produces new charges with an inimitable imagination.

The burden of entrepreneurs and employers is rising, sales tax, excise tax, “crisp tax”.  The EVA (simplified business tax) will rise as well unless they abolish it. We are nearly at twenty and the Fidesz tax increase brainstormings have only just began.  As we know now from every 100 Ft-s the government will take away 48 from the economy while Viktor Orban is preaching to Europe about tax competition.

It is embarrassing anyway when Hungarian government officials are saying that Central Europe is an engine of the European economy. It is good news –for the Polish, the Czechs and for the Slovakians, because that engine started there and not here.

The only calculable effect of budget set on bad basis and without the slightest competence will be that the poorer will become even poorer and the majority of the middle-classes will also slip into poverty of the whole middle-class itself will become impoverished. The government makes this sliding down the hill easy, but carefully secures that climbing up again would be impossible. And there is another thing the government is careful about: to not hear the warning voices of those protesting.

There is no reason for gentle words: this budget is disastrous and its realization will lead to social and economic catastrophe.