there was no bleeding in Budapest
The capital’s administration has planned HUF 167.5 billion in revenue from business tax (ipa) for 2022. In a recent background interview, General Deputy Mayor Ambrus Kiss revealed to VG’s interest that the actual figure will far exceed this figure.
The current forecast already speaks of a 14 percent plus, which is about HUF 23.5 billion extra.
So if the expectation is confirmed, an unprecedented amount of money will flow into the budget of Budapest, almost HUF 191 billion.
By way of comparison: the IPA in 2021 was HUF 157.7 billion. In other words, there was an increase of more than HUF 33 billion over the course of one year.
The capital campaign about the bleeding was not true
At the same time, the hefty surplus means that a long two-year debate has finally come to an end. Back in December 2020, the government decreed the release of half of the IPA. SMEs with a balance sheet total of no more than four billion forints can benefit from the discount introduced as part of the economic defense against the pandemic. He practically said that in Budapest
these companies are charged only 1 percent instead of the 2 percent rate in force here.
The possibility was originally for 2021, but this was extended to 2022 at the end of last year – also in a government decree. There will be no continuation, the possibility of halving the IPA will cease to exist next year. At the same time, subsidies to the local government sector will also increase, since the cancellation of the discount means an additional income of HUF 100 billion.
The capital management was pessimistic about the measure from the beginning, so much so that they launched an information campaign at the beginning of 2021 Let’s protect Budapest with a name. It stated that the cabinet’s decision does not provide substantial help to businesses, which means a serious loss from the point of view of the municipality.
The halving of the tax liability means a loss of about HUF 20 billion, and if we add that the companies have a much worse business year than the previous year, last year it could mean HUF 35 billion less income from business tax than expected.
they said. As it turns out, in reality the exact opposite process took place. Regardless of this, the halving of the tax was the main evidence of the “government bleeding”, and the instigator of the political debate between the town hall led by Gergely Karácsony and the cabinet.
Budapest does not have an easy financial situation, but that has nothing to do with ipa
this debate dragged on for years, and it turns out to be baseless right from the start. It is a fact that in 2020, compared to 2019, there was a drop of 21 billion (from 163.97 to 142.45 billion) in cash flow income, but this was undoubtedly caused by the escalation of the pandemic. It can’t even be related to the halving of the ipa, considering that it was published from 2021.
Then, however, it not only decreased further, but also increased by 15.2 billion.
This will be followed in 2022 by the 33 billion plus described above. Even so, the financing of Budapest’s operations faces serious problems. This year’s interest expenditure was planned to be 7.1 billion less due to the drastically increased interest rate environment, public lighting alone costs five billion more. In general, an extra HUF one billion is allocated for overheads and food for individual institutions. A much more serious issue is the case of BKV, which requires an addition of 21 billion only on the energy side, and according to the current situation, the company’s expenses may exceed revenues by 24 billion overall.
The city administration would introduce a savings package from September, and the general assembly will vote on this at the end of August. According to the proposal, starting next month, the end of the decorative lighting will be shortened by two hours, instead of midnight in the winter, the end of the decorative lighting will be moved forward from 1 am to 11 pm in the summer, and from 1 am to 11 pm. I would also order that the premises of companies and institutions in the capital – if they do not carry out supply activities – can be heated to a maximum of 21 degrees, and in summer the climate cannot be set below 25 degrees.