Leaked Memo Reveals Tisza Party's Plan of Painful PIT Hike

Even people with average incomes would pay more tax, and the Tisza Party's economic working group also proposed reviewing and narrowing the scope of the family tax relief system.

Peter Magyar and his team may be preparing to introduce a three-tier progressive income tax, as revealed by an internal memo prepared for the party leadership that came into the possession of Index. Under the plans of the Tisza Party's economic cabinet, only a very small segment of the population would remain at the current tax level, with even the average wage falling into the 22 percent tax bracket. Above 1.25 million forints, the 33 percent bracket would apply.

All this is being planned by the Tisza Party despite the fact that Peter Magyar had previously promised a significant reduction in personal income tax (PIT).

In the spring, the Tisza Party asked its supporters in a consultation called the Nation's Voice: "Do you agree that personal income tax (PIT) should be reduced to a uniform rate of 9 percent?" The vast majority of the 1.137 million people who completed the questionnaire—more than 900,000 people—understandably voted in favor of the proposed major tax cut.

 

Promises Are Pretty Words…

At the time, Peter Magyar stated that the consultation’s result would form the backbone of his party’s program in 2026. As Index points out, this would mean that the Tisza Party would introduce a nearly 2,000-billion-forint personal income tax cut, which would blow a huge hole in the budget.

Peter Magyar also promised his supporters a radical VAT reduction. In the Nation's Voice consultation, the abolition of VAT on medicines and the reduction of VAT on "healthy food products" to five percent received overwhelming support, above ninety percent.

Compared to these figures, the plan to reduce personal income tax, which received only 81.9 percent support, can be considered low. Only Ukraine's EU membership (58 percent) received a lower percentage of votes from the Tisza Party's supporters. The reason for this likely lies in the fact that many of the Tisza Party's supporters are committed opponents of the government, who have long been persuaded by left-wing politicians to believe in the fairness and necessity of introducing a multi-bracket tax system.

The document obtained by Index reveals that Peter Magyar’s party may indeed be considering the introduction of a progressive income tax.

The memo, prepared by the Tisza Party’s economic cabinet for the party leadership, argues for the necessity of a three-bracket personal income tax.

According to the memo, "the Hungarian economy has exceeded its capacity to bear the burden and, by 2026, will essentially collapse under Fidesz's plundering economic policy." The authors therefore believe that in 2026, a fundamental overhaul of the entire tax system will be needed, with a "focus on reviewing tax breaks for the general public."

The document obtained by Index (Source: Index)

The document obtained by Index (Source: Index)

The Tisza Party's economic working group then called for a review and narrowing of the scope of the family tax relief system and proposed the introduction of a three-tier progressive income tax.

According to the document:

• below 5 million forints annually, the current 15 percent personal income tax would remain;
• between 5 and 15 million forints annually, taxpayers would pay 22 percent;
• above 15 million forints annually, the tax rate would be 33 percent.

This would mean that those earning more than 416,000 forints per month, i.e. not only those with average but also with median incomes, would face a personal income tax increase. The highest, 33 percent bracket would apply to those with monthly incomes of 1.25 million forints.

This includes, for example, a significant proportion of doctors, whose previously increased incomes would now be heavily taxed by the Tisza Party compared to the current system.

Regarding the authenticity of the document, Index highlighted that in the absence of an official header, stamp, or handwritten signature, they were not able to verify it. However, sources with insight into the Tisza Party’s economic plans unanimously confirmed that Magyar Peter and his team are indeed considering the introduction of a multi-bracket personal income tax.

According to the paper’s information, the Tisza Party’s economic working group – coordinated by Aron Dalnoki, mentioned in the memo – has prepared a longer, complex economic program, which has since been presented to a broader circle of economic experts. Reportedly, economists belonging to the Tisza Party’s orbit, such as Peter Akos Bod, and Fidesz's former state secretary Andras Karman, who recently appeared at the Tisza Party congress, have also reviewed the material.

Another source said this material may have been prepared because Aron Dalnoki and his working group are also aware that such a large personal income tax increase could be politically very uncomfortable for Peter Magyar. This could be especially true given that the idea of a significant reduction was included in the Nation's Voice consultation. Within the party leadership, however, there are concerns about how they will communicate all this to society.

The Math Doesn’t Add Up?

According to the outlet, the experts tasked with creating the economic program have warned Peter Magyar that something would have to be done to implement the election promises, because "in the end the math has to add up."

The memo prepared for the party leadership also reveals this tension. The authors emphasize in several places how their plans could affect political communication.

“Naturally, we are aware that all this is politically sensitive and could easily cause instability for a new government, so the proposal will require communication support before its introduction,” the authors said. At the same time, the Tisza Party’s economic working group immediately suggested how to ease the political tension. In the case of VAT, they recommend a two to three percent reduction, which, if communicated appropriately, would divert attention from the significant personal income tax hike.

The question remains whether the introduction of a multi-bracket tax will officially be included in the Tisza Party’s program. So far, Peter Magyar has revealed relatively few specifics about how he intends to increase revenues. Yet the Tisza Party will eventually have to find a way to finance the measures it has promised so far, Index wrote.

Cover photo: Peter Magyar, leader of the Tisza Party (Source: Facebook)