Part I — Situation overview

At his parliamentary hearing on 12 May 2026, Finance Minister András Kármán set out in detail the new government’s tax policy and budgetary direction. The announcements contained three main items. First, there will be no PIT change for this year (2026) — the originally indicated PIT cut is rescheduled. Second, from 2027 the KATA returns (itemised tax of small taxpayer enterprises) — its precise form will be debated in the summer-autumn phase of 2026 between the Ministry of Finance, the government and economic actors. Third, VAT- and PIT-cutting measures are being developed, while the 2026 budget will be completely rethought, because — according to Portfolio’s reporting — the Tisza government inherits the 2026 budget in “terrible condition”: the deficit utilisation in the first four months of 2026 stands at 91%, and the rewritten and concealed commitments amount to a roughly 1666 billion HUF excess.

HVG showed that the planned PIT-cut package generates a 300 billion HUF revenue shortfall in the first year — roughly equal to the full annual pension-increase envelope, or about 70% of one year’s police budget. In parallel, Portfolio published the revised outlook of Magyar Telekom’s Q1 report and the forint exchange rate: the market took the political change well, but the budgetary uncertainty of 2027 may also bring a risk premium increase (CDS rise, yield-spread increase on the 10-year government bond). In parallel, Minister for Economic Development István Kapitány announced a review of the “assembly-plant model” and a system-change in corporate special taxes.

In MIAK’s reading the situation is significant. For two decades the Hungarian fiscal system has been moving within the pattern of Kornai’s “soft budget constraint” — subsequent rewriting of commitments, agenda-side modification of deficit targets, fiscal “skeletons” year after year. The Tisza government’s announcement is the possibility of a system-level reset: new budget, new tax-type structure, new transparency practice. But without compensation for the 300 billion PIT shortfall, the reset will remain only rhetorical — it will further increase the structural imbalance.

Part II — Literature-based grounding

Before turning to MIAK’s concrete proposals, it is worth fixing the scientific frame in which the new tax policy can be interpreted. In Capital in the Twenty-First Century (2013), Thomas Piketty (1971-, French economist) empirically shows: the return on capital (r) persistently exceeds economic growth (g), and as a consequence the concentration of wealth in capitalist democracies grows structurally — and this can be counterbalanced stably only by a wealth tax and progressive capital-income taxation. In Wealth of Nations (1776), Adam Smith (1723-1790, Scottish economist) formulates four classical tax maxims: proportionality (contribution in proportion to capacity), certainty (predictable rule), convenience (a form simple for the payer), and efficiency (low administrative cost, slight economic distortion). These four criteria must be applied to assess the legitimacy of every tax-reform package. In The Socialist System (1992), János Kornai (1928-2021, Hungarian economist) describes with the concept of the soft budget constraint that fiscal pattern in which commitments can be subsequently rewritten, deficit targets can be handled flexibly — and this is exactly the pattern that reappears in the 91% deficit utilisation of 2026 and the 1666 bn HUF rewriting. The detailed literature discussion can be found in section 6.4 Literature audit detail.

Part III — MIAK’s concrete proposal

MIAK proposes three operational measures for the substantive and procedural reinforcement of the tax reform and the new budget.

3.1 Structural wealth tax on net wealth above 500 million HUF (introduced from 1 January 2027)

The structural compensation of the 300 billion PIT shortfall should not come from sector-side rises (VAT increase, drawing down budget reserves), but from a progressive wealth tax: on net wealth above 500 million HUF an annual 0.5%, above 1 billion 1%, above 5 billion 1.5% — partial within every 100 million HUF band, with the “mild but persistent” banding proposed by Piketty (see 6.4.1). According to estimates there are roughly 8,000-12,000 households in Hungary in the net-wealth band above 500 million HUF (based on the KSH 2024 wealth estimate, supplemented with data from Cégtár and bank wealth reports), and the annual yield of the wealth tax would be in the range of 250-350 bn HUF — exactly as much as is needed to compensate the PIT shortfall. The technical implementation of the wealth tax: a machine-readable wealth-declaration register kept by the NAV (building on the principle of the A3 programme point), automatic aggregation of bank and company-court data flows, in line with Smith’s (see 6.4.2) “convenience” and “certainty” principles. MIAK proposes: the wealth-tax revenue should target-finance the retention of nurses in healthcare (E6) and a salary increase for school teachers — this is the key to political legitimacy. Operational implementation of programme points G7 and G8.

3.2 Return of the KATA with an employment test and an 18 million HUF annual ceiling (from 1 January 2027)

The main risk of the KATA’s pre-2022 distortions was disguised employment contracts: the employer “reclassified” the employee as a sole trader, thereby saving the social contributions. MIAK proposes: the return of the KATA should come with a mandatory employment test — annual revenue from a single client max. 50%, the entrepreneur’s actual operational independence (own equipment, own location, own time) examined by NAV revision control. The annual revenue ceiling is 18 million HUF (an inflation-update of the pre-2022 12 million ceiling), and the KATA tax is itemised (50 thousand HUF per month), not progressive. Above 18 million the small entrepreneur automatically moves over to the small-business tax (KIVA). This solution is, in Smith’s sense, convenient and certain, while distortion-prevention remains inclusive employment institution in the Acemoglu-Robinson sense (“extractive vs. inclusive institutions”). A concrete framework for programme point G3 (Simplification of the tax system).

3.3 Drucker-principled expenditure audit and 2027 budget transparency (within 60 days)

As preparation for the new budget, MIAK proposes: an independent expert panel (5-7 members, economist, budgetary researcher, sectoral expert — e.g. the expanded membership of the Fiscal Council + 2-3 independent researchers) should perform a Drucker audit of ministerial-level expenditures (see programme point G21). The methodology: every spending item above 1 bn HUF annually should be placed in a red/yellow/green category according to the following criteria: (1) is there a measurable policy outcome attached to the expenditure, (2) how much is the outcome in HUF terms (KPI/HUF ratio), (3) under the Drucker principle of “organised abandonment”, is there expenditure that can be stopped in good conscience. The estimate: the Drucker audit finds “red” items on ~4-6% of the entire central budget — this is an annual savings potential of 600-900 billion HUF. Stopping even 30-40% of the red items alone frees up 250-400 bn HUF, which by itself would cover the PIT-cut package. The parallel public dashboard (A1) is the operational mapping of the Smithian (see 6.4.2) “certainty” principle: the 2027 budget already contains the results of the Drucker audit at first reading, and the opposition, the press and professional actors can check the consistency of expenditure priorities.

The common principle of the three proposals: the structural compensation of the 300 bn HUF PIT shortfall is achievable through the three channels of wealth (G7-G8), expenditure efficiency (G21) and employment institutions (G3) together — not on a simple VAT increase, not on deficit-growth, and not on a supplementary redirection of EU funds. The shared lesson of the Piketty-Smith-Kornai trio: a fiscal reform will be lasting if it is structural (wealth and expenditure structure) and predictable (respecting the tax maxims), and not rhetorical or cyclical.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Household The PIT cut leaves on average 70-120 thousand HUF of extra income in an average earner household annually; the return of the KATA reduces the administrative burden of 300-500 thousand small entrepreneurs. The introduction of the wealth tax may temporarily trigger property-market and foreign wealth-placement movements — strengthening of NAV revision capacity is needed in the summer-autumn period of 2026.
Economy The new transparency focus reduces the forint’s risk premium; the CDS score may fall in the medium term (6-12 months) by 10-20 basis points if the Drucker audit produces real transparency. Because of the 91% annual deficit utilisation and the 1666 bn rewriting, the 2027 budget must show a structural deficit reduction — otherwise the risk-reduction will remain short-term market optimism. Return of Kornai’s soft budget constraint.
Society The wealth tax and the Drucker audit make the Smithian “proportionality” principle concrete: higher-income/wealth households contribute proportionately to common burden-sharing. Growing institutional trust in the middle 60% income band. The wealth tax may enter the political opponent zone (lobbying groups of economic interest representation and large corporations), the return of the KATA may in the short term increase disguised employment attempts — strengthening of NAV revision capacity is key.

The essence of the dilemma: structural tax reform (wealth tax + KATA return + Drucker audit) means political cost in the short term, but fiscal and institutional gain in the medium and long term. In MIAK’s reading the political cost must be borne, because the Hungarian fiscal experience after 2010 shows that postponing structural tax reform gets more expensive every year: compensating the soft budget constraint generates ever larger rewriting needs.

Part V — Measurability and conclusion

5.1 What is worth tracking? (proposed KPIs)

The performance indicators (KPIs) are proposed for the following 12-month time window:

  • First Drucker-audit report published by 31 July 2026; available on the website of the Fiscal Council and in the data depository section of kormany.hu.
  • 2027 budget draft at first reading by 1 October 2026 in the Parliament; the wealth-tax package and the result of the Drucker audit are included in it numerically.
  • NAV-level wealth-declaration cross-check on households with net wealth above 500 million HUF completed by 31 January 2027, aggregate results public (individual data not).
  • KATA employment-test NAV-revision methodology developed by 1 September 2026 and put out for public consultation.
  • CDS and 10-year yield developments: monthly monitoring of the market risk-perception on the dashboard of the MNB and the Fiscal Council.

5.2 Conclusion

Kármán’s announcements as a political moment mark the Tisza government’s first substantive economic policy package, and fix the possibility of a fiscal system-level reset. In MIAK’s reading the package will be a lasting result if (1) the compensation for the 300 billion PIT shortfall rests on a structural wealth tax, not on a VAT increase or deficit growth; (2) the return of the KATA defends inclusive employment institutions with an employment test; (3) the 2027 budget shows Drucker-audit-based transparency. Transparency and accountability — two of MIAK’s foundational values — are made concrete in the manner of compensating the 300 billion PIT shortfall. If the compensation is postponed, the CDS spread and the yield will reverse every rhetorical gain.

Part VI — Reasoning and further sources

6.1 Press framing by media spectrum

In the liberal-left and public-affairs strand (Telex, HVG, 444.hu, 24.hu) the focus was on the detailed walk-through of the concrete tax-policy announcements and on impact-calculation: Telex highlighted the practical details of the KATA return (“Several hundred thousand may await how the government again broadens the KATA”), HVG quantified the 300 billion PIT shortfall and presented the wealth-tax debate (“Wealth tax: it is not true that it cannot work, but it must be done smartly”), 24.hu the Kapitány announcement of the review of the “assembly-plant model”. In the business strand, Portfolio gave detailed analyses on the fiscal background (“The till is empty”, “The Tisza government inherits the budget in terrible condition”) and also collected market-analyst reactions (“András Kármán sent important messages, the market took it well”). In the conservative strand, Mandiner questioned cabinet-level credibility (“After the champagne, how does the campaign become governance?”). The whole spectrum brought the content of the Kármán announcements in factual terms — the marked interpretive difference appeared in the assessment of the cover solutions (wealth tax vs. VAT increase vs. EU funds).

6.2 Facts and data

Indicator Value Source
2026 first four months’ deficit utilisation 91% Portfolio 7-9 May 2026 + Ministry of Finance
Rewritten budget items in 2025 (Q4) ~1666 bn HUF HVG 7 May 2026
Planned PIT cut first-year shortfall ~300 bn HUF HVG 13 May 2026
KATA pre-2022 annual revenue ceiling 12 bn HUF / person NAV (pre-2022 in force)
Hungarian average monthly gross wage 625 thousand HUF (median) KSH 2026 Q1
Households with net wealth above 500 bn HUF (estimated) 8,000-12,000 KSH 2024 wealth estimate + WID.world

6.3 Policy projections

  • Economy (programme points) — Data-driven budget (G1), Tax-system simplification and progressive reform (G3), Wealth-inequality monitoring (G7), Progressive capital-income taxation (G8), Anti-cyclical fiscal stabiliser (G15), Algorithmisation of Smith’s tax principles (G16), Systematic review of state expenditures (G21).
  • Employment policy (programme points) — the KATA system as a quasi-employment form, employment test and inclusive entrepreneurial institutions.
  • Public administration and e-government (programme points) — Drucker-principled efficiency measurement (KI8) for ministerial expenditure audits.
  • Transparency and anti-corruption policy (programme points) — Public-money dashboard (A1), Publicity of asset declarations (A3).

6.4 Literature audit detail

6.4.1 Piketty: Capital in the Twenty-First Century

Piketty’s empirical fundamental thesis: the return on capital (r) persistently exceeds economic growth (g) — r > g —, as a consequence of which the concentration of wealth in capitalist democracies grows structurally in the long data record of the 19th-21st century. According to Piketty only a wealth tax and progressive capital-income taxation can counterbalance this stably, because the progressive taxation of labour incomes alone does not reach the top 1-0.1% wealth-concentration band, where capital income dominates.

“When the rate of return on capital significantly exceeds the growth rate of the economy (as it did through much of history until the nineteenth century, and as is likely to be the case again in the twenty-first century), then it logically follows that inherited wealth grows faster than output and income.” (Piketty, 2013, Introduction)

In the Hungarian context the Piketty thesis means: the structural compensation of the 300 bn HUF PIT shortfall should not come from labour income (from which the PIT revenue originates), but from the top band of capital and wealth concentration, where the r > g dynamics work most strongly. The proposed 0.5-1.5% progressive wealth tax is not confiscatory but mild, persistent, banded — exactly the Hungarian adaptation of the Piketty-style model.

📖 Source: Piketty, Thomas: Capital in the Twenty-First Century

6.4.2 Smith: Wealth of Nations — four tax maxims

In Book V, Chapter II, Adam Smith formulates four classical tax maxims: proportionality (“equality”), certainty (“certainty”), convenience (“convenience”), efficiency (“economy in collection”). These four criteria are the timeless yardstick of the legitimacy of tax reform — the legitimacy of every tax-policy change is checkable by them.

“The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.” (Smith, 1776, Book V, Chapter II)

The test of the Hungarian Tisza-style tax reform on the Smithian yardstick: (1) proportionality — the PIT cut is an equally proportional concession, the wealth tax proposed as compensation prescribes proportionally higher contribution to the higher band → both Smith-conform; (2) certainty — the KATA return with a pre-fixed ceiling (18 million HUF) makes the financial planability of small entrepreneurs certain; (3) convenience — the NAV-led automatic wealth aggregation reduces the administrative burden on the payer; (4) efficiency — through the Drucker audit, the minimisation of collection costs and distortions. The reform is defensible on all four maxims — which can be contrasted with the Smithian test of the post-2010 single-rate PIT system, where the proportionality principle fails (regressive).

📖 Source: Smith, Adam: An Inquiry into the Nature and Causes of the Wealth of Nations

6.4.3 Kornai: The Socialist System — soft budget constraint

János Kornai formulated the category of the soft budget constraint (SBC): that fiscal pattern in which the economic actor (firm, institution, even a state portfolio) expects that the deficit will be subsequently compensated, commitments can be rewritten, the deficit can be “settled”. The SBC is not socialism-specific — in his 1990s works Kornai expressly warned: post-socialist democracies can reproduce the SBC pattern in their own fiscal systems if the political cycle is shorter than the fiscal planning cycle.

“The soft budget constraint is a situation in which the actor knows that its losses will be subsequently compensated — which distorts economic calculation and may rekindle irresponsible commitment-making.” (Kornai, 1992, paraphrase)

The Hungarian situation in 2026 is a classic Kornai case: the 91% annual deficit utilisation in four months, the 1666 bn HUF pre-election rewriting, and the Hungarian Gazette of 17 April with the decree on cancelling the expiry date are all operational manifestations of the soft budget constraint. The Tisza government’s new budgetary frame will only be lasting if it counterbalances the SBC pattern with explicit rule-based brakes (constitutional deficit target, anti-cyclical stabiliser, commitment moratorium with transparency rules). The proposed G15 (Anti-cyclical fiscal stabiliser) and G21 (Drucker audit) are operational responses to Kornai’s SBC problem.

📖 Source: Kornai János: A szocialista rendszer (The Socialist System)

6.5 International comparison

  • Norway (formuevskatt — wealth tax): Annually 1% of net wealth above 1.76 million NOK (individual), above 1.1% then 1.5%; annual revenue around 17 bn NOK (~600 bn HUF). The Norwegian model is stable, predictable, low evasion rate — due to the close cooperation NAV-Skatteetaten.
  • Spain (impuesto sobre el patrimonio): Progressive wealth tax with 0.2%-3.5% banding, with regional supplement. The “solidarity wealth tax” after 2022 (1.7-3.5% on wealth above 3 million EUR) has an annual revenue of about 600 million EUR.
  • OECD (EU Economic Survey 2025): In connection with the pre-2022 distortion of the KATA system, an explicit recommendation: an employment test must be built in to every simplified small-business tax form, otherwise regulatory arbitrage erodes employee contribution revenues.
  • EU IFI matrix (Fiscal Councils 2024 report): The 91% annual deficit utilisation in 4 months is at EU level outstanding and strengthens the risk of the EDP (Excessive Deficit Procedure). The structural deficit-reduction trajectory of the 2027 budget is a condition of the EU disbursements (RRF, cohesion).

Economy

  • G1 — Data-driven budget
  • G3 — Tax-system simplification and progressive reform
  • G7 — Wealth-inequality monitoring
  • G8 — Progressive capital-income taxation
  • G15 — Anti-cyclical fiscal stabiliser
  • G16 — Algorithmisation of Smith’s tax principles
  • G21 — Systematic review of state expenditures

Transparency and anti-corruption policy

  • A1 — Public-money dashboard
  • A3 — Publicity of asset declarations

Public administration and e-government

  • KI8 — Drucker-principled efficiency measurement in public administration

Suggested new programme point: Wealth-tax targeted use (nurse retention + teacher salary increase) financing model — to the Economy area, as an operational extension of G7 and G8.

6.7 List of sources

Press sources (MIAK press monitor, 13 May 2026 — top 4 topic):

  • [Telex] Several hundred thousand may await how the government again broadens the KATA — https://telex.hu/ (title-level reference only)
  • [Telex] Wealth tax: it is not true that it cannot work, but it must be done smartly — https://telex.hu/nevertek/2026/05/13/egy-valoban-mukodo-es-emberseges-vagyonado-megtervezese
  • [HVG] The KATA returns, VAT and PIT cuts come, and a completely new budget — András Kármán, prospective finance minister, presented his plans — https://hvg.hu/ (title-level reference only)
  • [HVG] A 300 billion shortfall would be caused by the Tisza government’s PIT cut plan — https://hvg.hu/ (title-level reference only)
  • [24.hu] András Kármán: The era of the assembly-plant model is over — https://24.hu/ (title-level reference only)
  • [Portfolio] The KATA returns, the system of corporate special taxes also changes - Big announcement by András Kármán — https://www.portfolio.hu/ (title-level reference only)
  • [Portfolio] András Kármán sent important messages, the market took it well — https://www.portfolio.hu/ (title-level reference only)
  • [Portfolio] Here is the data: the Tisza government inherits the budget in terrible condition — https://www.portfolio.hu/ (title-level reference only)
  • [Portfolio] András Kármán’s hearing took place - One important name is already known from the new Ministry of Finance team — https://www.portfolio.hu/ (title-level reference only)
  • [Portfolio] András Kármán: there will be no PIT-system change this year — https://www.portfolio.hu/ (title-level reference only)
  • [Portfolio] The till is empty after Fidesz – What can Tisza do? — https://www.portfolio.hu/ (title-level reference only)
  • [Mandiner] After the champagne, how does the campaign become governance? Péter Magyar has to respond to this challenge — https://mandiner.hu/ (title-level reference only)

Knowledge-base references (professional books):

  • 📖 Piketty, Thomas: Capital in the Twenty-First Century
  • 📖 Smith, Adam: An Inquiry into the Nature and Causes of the Wealth of Nations
  • 📖 Kornai János: A szocialista rendszer (The Socialist System)

MIAK-internal materials:

  • MIAK policy area: Economy (programme points; programme point ID: G1, G3, G7, G8, G15, G16, G21)
  • MIAK policy area: Employment policy (programme points)
  • MIAK policy area: Public administration and e-government (programme points; programme point ID: KI8)
  • MIAK policy area: Transparency and anti-corruption policy (programme points; programme point ID: A1, A3)
  • MIAK press monitor, 13 May 2026 — 4th topic, score: 92/100

Supplementary public data sources:

  • OECD: EU Economic Survey 2025 — Hungary chapter
  • IMF: World Economic Outlook 2025 — Hungary article IV consultation
  • KSH 2026 Q1 GDP and employment data
  • MNB Inflation Report 2026-04
  • Fiscal Council 2026 evaluation
  • WID.world Hungary 2024 (wealth-inequality data)

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