Brutal HUF 1300bn Austerity Plan: Tisza Party's Full Economic Program Comes to Light

Although the future envisioned by the Tisza Party is allegedly built on social equality and strengthening social rights, the so-called Tisza Plan in reality includes a sweeping series of tax hikes and the elimination of existing benefits. According to the economic blueprint drafted by Peter Magyar’s party, child care allowance (GYED) would be abolished, children’s healthcare would no longer be free, and even the current social security system would be fundamentally redesigned. The program also introduces a radical progressive tax increase on all income not earned from work.

The Tisza Party is preparing the harshest austerity package of the past decades—according to the hundreds-page economic proposal obtained by Index. Based on the document, Peter Magyar’s party clearly intends to initiate a sharply left-wing economic shift, outlining a more radical transformation of Hungary’s tax and contribution system than anything proposed in the past decade.

The document places strong emphasis on social equality and state redistribution, while listing an unusually wide range of tax and contribution increases that would affect the overwhelming majority of Hungarian households and businesses.

The Tisza Party’s program is not a simple reform package but a left-wing economic experiment that would impose tangible burdens on salaries, families, entrepreneurs, and investments alike.

Peter Magyar’s economic plan reveals a 1300 billion-forint austerity program, financed through severe tax hikes and increased social contributions (Source: Index)

The proposal titled Hungary 2027–2035 Convergence Program is a comprehensive professional dossier. According to Index, the depth and technical detail indicate that the Tisza Party is fully serious about reshaping Hungary’s economic future over the next decade.

While the party’s projected future emphasizes social equality and strengthened social rights, the plan carries the classic risks of left-wing economic policy and could undermine competitiveness.

The program states that the government would need at least 1300 billion additional forints in revenue every year—generated not through economic growth, but through strict austerity measures, higher taxes, and increased social contributions.

Tax Hikes, Elimination of Benefits

The core of the program is a drastic increase in progressive personal income taxation, along with several measures that would fundamentally rewrite the logic of Hungary’s current tax system:

• complete elimination or radical reduction of family and corporate tax reliefs,
• progressive taxation of corporate and capital income, placing new burdens on private and business investments,
• raising VAT to 32 percent—one of the highest in Europe—supplemented by new special taxes on alcohol and tobacco,
• and introduction of a new solidarity-based pension and healthcare contribution system, requiring a full revamp of current payment structures.

The program significantly expands state redistribution and the government's role, while placing much heavier financial burdens on citizens and employers.

In everyday life, the Tisza Party’s tax reform would be widely felt: by introducing progressive income taxation, the state would take more money from nearly all average wage earners. Two new tax brackets would be introduced: 22 percent income tax for gross monthly earnings above 416,000 forints and 33 percent for gross earnings above 1.25 million forints. In September, the gross average wage of full-time Hungarian workers reached 687,100 forints, meaning the measure would affect the average worker, as well as those earning the median wage (568,700 forints).

In practice, this means that

Hungarians earning the current average income would pay hundreds of thousands of forints more annually.

One of the most sensitive elements is the curbing of family tax benefits. According to the document, tax relief would be reduced by 30 percent in the middle-income tier and by 50 percent in higher-income households. This means the average Hungarian family would receive one-third less tax allowance per child.

 

 

The Tisza Plan’s Harshest Tax Measures

The program would radically alter the financial reality of small Hungarian businesses. The simplified tax system known as EKHO would be completely eliminated. As a result, tens of thousands of professionals in creative industries, along with journalists, artists, actors, athletes, would be pushed into stricter flat rate or itemized taxation. KATA would remain available only to a narrow group of students and pensioners.

The National Tax and Customs Administration would take over nearly all payroll administration from employers, and a mandatory real-time monitoring system, the Digital Employee Card (DMK), would be applied to everyone.

This system, according to the description, would function as a digital gatekeeper, constantly monitoring every detail of employment and income.

Perhaps the most surprising and controversial proposal is the introduction of a 6.5 percent annual wealth tax, not only on luxury real estate but also on cars and other high-value movable assets.

The tax authority would carry out a full asset assessment covering all real estate and larger movable assets. According to the plan, all Hungarian citizens whose total assets exceed 500 million forints would be affected.

All real estate, all vehicles above 1,600 cubic centimeters, business shares, securities, artwork, and even expensive jewelry would be taken combined in the assessment. 

The Tisza Party also plans a sharp VAT hike on automobiles, alcohol, and tobacco. VAT on cars and car parts would uniformly rise to 32 percent, immediately increasing prices from car dealerships to repair shops. This particularly affects vehicles over 1,600 cubic centimeters, the everyday category used by much of the middle class.

The average price of beer would rise by 50–60 percent.

Wine, spirits, and cigarettes could even double in price, meaning a simple table wine would cost around 3,000 forints per liter, and a pack of cigarettes could reach 4,500 forints.

The program would also introduce radical progressive taxation on all income not originating from work:

• rental income,
• real estate sales,
• dividends,
• stock market gains,
• government securities earnings.

Tax rates would rise to 20, 30, and 40 percent. Renting out an average apartment would incur a 20 percent tax, while selling a property could face the highest 40 percent rate.

The chapters of the hundreds of pages of  economic plan by the Tisza Party are authenticated by several signatures (Source: Index)

 

Changes to Corporate Taxation and Social Contributions

The Tisza Party would also overhaul corporate taxation, introducing progressive tax brackets—significantly increasing burdens on small and medium-sized enterprises. Instead of today’s flat 9 percent corporate tax, SMEs would pay 13.5 or 18 percent, large domestic companies 21.5 percent, multinational corporations 25 percent.

Most SMEs would lose access to the simplified KIVA tax system, which would be limited to businesses with fewer than 10 employees and annual revenue below 150 million forints, meaning that only microbusinesses would remain eligible. Corporate tax benefits would be almost entirely abolished, except for development tax credits, which would be cut by 25 percent for small firms and by 50 percent for medium-sized ones.

The plan also restructures social contributions. The employer-paid 13 percent social contribution tax (szocho) would be abolished, and 

replaced by four new contributions.

New types of burden:

• healthcare maintenance and public health contribution: 5 percent
• solidarity pension contribution: 2.5 percent
• solidarity healthcare contribution: 2 percent up to 1 million gross income, 4 percent above
• vocational training contribution: 1.5 percent

These solidarity contributions would also apply to individuals earning separate taxable income, such as rental income, capital gains, property sales, thus increasing their tax burden. Contribution rates would be progressive:

•  solidarity pension contribution: 3, 5, or 8 percent
•  solidarity healthcare contribution: 6 percent or 8 percent

The system would thus collect contributions from two sources: from employers on wages, and secondly from individuals on all their non-wage income. The combined burden would therefore increase significantly. For example, selling real estate would incur at least 15.5 percent in contributions, on top of a 40 percent capital gains tax.

The Tisza Party Would Revamp the Entire Social Security System

The program also introduces new solidarity taxes, automatically deducted in addition to other contributions. These include a 20 percent widow’s pension tax and a 20 percent inheritance tax on health insurance policies.

The party would abolish the current state-run social security model. The existing 18.5 percent social security contribution would be replaced by mandatory private payments.

Pensions and healthcare would no longer be backed by the Hungarian state, but exclusively by private pension funds and insurance companies—at significantly higher cost. While minimum packages would resemble current burdens, maintaining today’s level of services could require employees to pay 30–35 percent of their income.

Child care allowance (GYED) would be abolished, children’s healthcare would no longer be free, and insurance fees would be determined based on lifestyle-related bonus–malus evaluations. Those who do not pay would receive only basic and emergency care. Healthcare workers would remain formally state employees, but their salaries would depend entirely on insurance revenue, meaning fewer patients and lower income would result in lower wages.

Although minor at first glance, the program ends with a symbolic measure: the Tisza Party would introduce a dog and cat tax.

Every dog and cat would cost owners 18,000 forints per year.

Even harsher penalties would apply to abandoned animals: a daily 8,000-forint care fee, plus full veterinary expenses, collected by the state. Pet ownership would become more expensive, as an additional 4 percent tax would be added to pet-related products on top of VAT.

Cover photo: Peter Magyar and Manfred Weber (Photo: AFP/Attila Kisbenedek)