Part I — Situation overview

Today, 19 October, Prime Minister Péter Magyar presents the main directions of the 2027 budget in a pre-agenda speech at the sitting of the National Assembly starting at 1 p.m. According to Portfolio, the detailed bill may arrive on Tuesday or Wednesday. The Prime Minister wrote in advance that this will be “the budget of fairness and development”. The announced direction: savings on the running of the state, reallocation of resources from billion-forint fortunes and polluting companies towards families, pensioners, domestic businesses, education and healthcare, and housing, transport and water investments from EU funds. At the same sitting there will be a final vote on the amendment of the 2026 budget, which creates the Contingency Fund for emergencies. If the House adopts it, the 30-day deadline of the activation rule that MIAK proposed on 8 September starts from promulgation. According to 24.hu, depending on nominations, MPs may also decide by a two-thirds majority on the still vacant seats of the Media Council. This blog post was written before the presentation, so it cannot yet know the concrete figures.

Several elements of the revenue side are already known. The wealth tax starting in January applies to net wealth above 1 billion forints, and the government expects revenue of around 200 billion forints a year from it (Portfolio). According to HVG, kata, the itemised tax of small taxpaying businesses, will again be available to entrepreneurs invoicing companies. The preferential, so-called ekho taxation of professional footballers is also being abolished. On the deficit, Telex asked investors in London. In their view, a budget deficit target (the planned value of the annual general government deficit, set in advance as a share of gross domestic product, i.e. GDP) below 5.5 per cent would be acceptable, and below 5 per cent decidedly ambitious. Analysts’ estimates range between 5 and 5.7 per cent. In September, Finance Minister András Kármán said that this year’s 7.5 per cent deficit is “not acceptable even in the short term”. In recent weeks MIAK has already proposed a consolidation map, a promise-by-promise cost table and a credibility summary for the 2027 plan. This analysis does not repeat them.

Today’s presentation raises three questions to which the earlier proposals have not yet given an answer. The first: the 2030 election year. The 3 per cent target falls precisely in the year when adjustment is politically hardest. The second: the energy subsidy worth 2 per cent of GDP. It not only burdens the deficit but also distorts measured inflation, and that matters for euro adoption too. The third: the debate around the wealth tax rests on tax-burden figures that no official statistics publish. MIAK’s reading is that the credibility of the 2027 budget does not depend on a single deficit figure. It depends on whether the path can be held in the election year too, and whether the state measures everything on which it builds its own arguments.

Part II — Grounding in the literature

Three sources provide the framework for interpreting the three questions. According to the 2025 World Economic Outlook report of the International Monetary Fund (IMF), the basis of credibility is a pre-announced adjustment path, a contingency plan for shocks and an independent fiscal institution. In a footnote it also warns that governments tend to loosen financial conditions before elections. Because of the 2030 election year, this directly affects the Hungarian path. A box in the IMF’s 2023 report models the effect of energy subsidies in the euro area: the subsidy lowers measured inflation today, but raises it after it is phased out. Applied to the Hungarian utility price cut: part of today’s inflation figure is borrowed. Thomas Piketty (French economist, leading researcher of long-run data on wealth inequality) describes in his book Capital in the Twenty-First Century how the publication of detailed tax statistics declined. In his view, official data on wealth and tax burdens is a precondition of democratic debate. The detailed discussion of the literature — source by source, with quotations — is in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable steps. They are not about the level of the deficit target, but about which questions the 2027 plan gives a verifiable answer to.

3.1 The path should fall below 3 per cent by 2029, and a funding rule is needed for the 12 months before the election (together with the medium-term plan; the rule to be enacted in law by 30 June 2027)

From the 7.5 per cent deficit of 2026 to the 3 per cent target there is an adjustment of 4.5 percentage points (pp). Telex presented two illustrative paths. One front-loads the hard part at the beginning of the cycle and brings the deficit to 2.8 per cent by 2029. The other is gradual and still assumes 3.5 per cent in 2029. MIAK does not propose a concrete 2027 figure, but it does take a position on the shape of the path. The Ministry of Finance’s medium-term plan should state that the deficit falls below 3 per cent by 2029 at the latest. That way 2030, the election year, remains a reserve year, and the credibility of euro adoption does not hinge on whether the last step succeeds in a campaign year. This requires at least two-thirds of the 4.5 pp to be done by the end of 2028. The same plan should also include a funding rule, adopted by the National Assembly in law. In the 12 months before the 2030 parliamentary election, a new permanent spending increase or tax cut could be put before the House only if the same bill names an offsetting measure, saving or revenue of the same size. The Fiscal Council should give a public opinion on the funding. The IMF’s 2025 report (see 6.4.1) highlights precisely the pre-announced path and the risk of pre-election loosening. The proposal complements the G23 debt-sustainability framework and links to MIAK’s proposal of 2 October: there the pre-election report was about information, here it is about the funding of spending decisions.

3.2 The energy-price subsidy on a separate line, alongside an inflation indicator without the utility-price effect (in the 2027 bill; quarterly publication from the first quarter of 2027)

According to the investors asked by Telex, the utility price cut amounts to 2 per cent of GDP. The paper also points out that, when examining the conditions for euro adoption, the European Central Bank (ECB) also looks at how durable low inflation is. If the Maastricht inflation criterion (a price-stability requirement for euro-area membership laid down in the treaty) is met only because of the subsidised energy price, that may raise questions. MIAK proposes two steps. First: the 2027 budget bill should show the full cost of the energy-price subsidy on a single, named line, with its value as a share of GDP and broken down by energy carrier (gas, electricity, district heating). Second: the Hungarian Central Statistical Office (KSH), in cooperation with the Magyar Nemzeti Bank (MNB, the central bank), should publish a supplementary indicator every quarter. It would show how much the consumer price index would differ if households paid market energy prices. If such a calculation already partly exists in the central bank’s analyses, it should be turned into a regular publication announced in advance. According to the IMF’s 2023 model calculation (see 6.4.2), such a subsidy lowers inflation today and raises it after it is phased out. This effect must be foreseen, not discovered after the fact. The proposal is not about abolishing the utility price cut. For its restructuring, MIAK earlier proposed a consumption-band system. Here the goal is measurement: a joint application of the G25 energy-price-shock preparedness plan and the G1 data-driven budget.

3.3 An official annual tax-burden report by income decile and for the top 1 per cent (first edition by 30 June 2027, thereafter as an annex to every budget bill)

One of the central figures in the government’s argument for the wealth tax is that the lowest earners are taxed at a higher effective rate than the richest. Telex’s G7 section looked into the origin of the figure: it may come from a 2022 study by the Budapest Institute, which found on 2020 data that the tax burden of the top income decile is 6–8 percentage points lower than that of the bottom one. The author of the study, Judit Krekó, told G7 that the calculation did not include the allowances on capital income, and that the tax system has changed since. In other words, the most important starting figure for the 2027 tax changes comes not from official statistics but from a researcher’s estimate based on six-year-old data. MIAK proposes that the Ministry of Finance, the National Tax and Customs Administration (NAV) and the KSH publish an official tax-burden report every year. It should show, by income decile and for the top 1 per cent, the burden of all taxes and contributions: personal income tax (SZJA), contributions, VAT, excise duty, taxes on capital income, kata and, from 2027, the wealth tax as well. It should show the effect of allowances separately, also by family type. The anonymised data should also be available through researcher access. Piketty (see 6.4.3) describes precisely how, in the absence of such statistics, the debate is forced to rely on estimates instead of official data. The report would be the tax-burden element of the G7 wealth-inequality monitoring. With its part on family allowances it would also serve the DM2 family-support impact assessment. The tax-allowance inventory that MIAK proposed on 9 October measures the revenue loss of individual allowances, while this report measures the total burden.

The three proposals are connected by one principle: the strongest claims of the 2027 budget — that the path is credible, that inflation is durably low, and that the tax burden is unfairly distributed — are convincing only if they are backed by a rule fixed in advance and by regular official measurement. The IMF says the same from the side of the path, Piketty from the side of statistics: what the state does not measure and does not commit to in advance, neither the market nor the voter can hold it to account for.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Economy The 2029 target date and the funding rule can reduce the risk premium (spread), i.e. the extra that investors demand for Hungarian government securities. This can bring savings on interest spending. Adjustment front-loaded at the start of the cycle may hold back growth and consumption in 2027–2028 if spending cuts are poorly targeted.
Society The tax-burden report puts the debate on the wealth tax and SZJA on a factual basis, and the utility-effect indicator signals later price rises in advance. Publishing the utility-effect indicator is politically sensitive: the debate may turn to the immediate abolition of the utility price cut, although the proposal is about measurement.
Public administration It builds on existing data of the KSH, the NAV and the ministry, and requires no new office. Data-protection risk in reporting the top 1 per cent; strict anonymisation and a minimum cell size are needed.
Politics The funding rule reduces the risk of pre-election handouts, whichever government is in office. The rule also binds the next government, so it is durable only with broad agreement; if introduced unilaterally, it is easily reversed.

The main question for weighing is in proposal 3.1. Faster adjustment reassures investors, but is more painful for households over the next two years. Telex also quotes the expectation that the path should not hold back growth and consumption. MIAK therefore does not prescribe the 2027 figure, but the 2029 end point and the two-thirds share by the end of 2028. That way the government itself decides in which year and with which tools it acts. The proposal tips to the risky side if, because of an energy-price shock or a recession, the 2029 target can be held only by cutting social spending. For this case, the medium-term plan needs an exception rule fixed in advance, on which the Fiscal Council gives an opinion. The risk of proposals 3.2 and 3.3 is low: they ask for measurement, not a decision. The biggest danger here is that the indicators are produced but do not make it into the budget debate.

Part V — Measurability and summary

5.1 What is worth following? (suggested KPIs)

MIAK suggests following these performance indicators (KPIs, Key Performance Indicators):

  • 2029 target date in the plan: whether the 2027 budget bill or the medium-term plan contains the deficit target for each year of 2027–2030, with a value below 3 per cent for 2029. Worth following until 31 December 2026.
  • Adjustment share: the 2028 deficit should be at most 4.5 per cent, i.e. at least two-thirds of the 4.5 pp adjustment should be done by the end of 2028. The check is based on the EU deficit notification of April 2029.
  • Utility-effect indicator: whether the first quarterly publication appears on the KSH website, in machine-readable form, by 31 May 2027.
  • Tax-burden report: whether the first official edition is completed by 30 June 2027, broken down by decile and for the top 1 per cent, including the allowances on capital income.

5.2 Summary

At today’s presentation attention is on the deficit figure, but MIAK asks three things of decision-makers. The medium-term plan should state that the deficit falls below 3 per cent in 2029, and the National Assembly should enact a funding rule for the 12 months before the election. The cost of the utility subsidy should go on a separate line, and the KSH should show its inflationary effect every quarter. Finally, there should be an official annual tax-burden report, so that the debate on the wealth tax and SZJA does not rest on an estimate based on six-year-old data. The proposals touch on two of MIAK’s foundational values. Data-drivenness, because the government’s own arguments — the unfair tax burden and durably low inflation — are today not based on official, regular measurement. And accountability, because a path that also covers an election year can be held to account only if the commitment is fixed in advance, in law, and is not decided in the heat of the campaign.

Part VI — Reasoning and further sources

6.1 Press framing by spectrum

Liberal-left band. Telex approached from two directions. Its economics section looked at the plan through investors’ eyes: it treated the deficit figure as important but only one indicator, and put the credibility of the medium-term path, the targeting of energy subsidies and the risk of the election year in the foreground. Its G7 section, by contrast, treated the topic as a distributional question and examined how much the wealth tax changes the total tax burden. 444.hu built on the Prime Minister’s Facebook post and highlighted the political message: the speech the Prime Minister promised as “perhaps his most important address so far” and the rhetoric against the oligarchs. HVG went through the details of kata and warned that the option of invoicing companies could also reopen the loophole of disguised employment. A relevant Népszava article was not among the processed material.

Public-affairs band. 24.hu treated the presentation as a parliamentary agenda item, in one line with the final vote on the amended 2026 budget and the Media Council election. It recalled the dispute over the Media Council in detail. Index’s opinion section criticised the design of the wealth tax. According to the author, the draft does not distinguish between accumulated and productive wealth, and implementation lacks an electronic land registry. The article considers introducing bands into SZJA a better tool.

Economic band. Portfolio wrote in an informative, fact-reporting frame: it collected the Prime Minister’s promises, the Finance Minister’s earlier statement on the deficit and the elements already announced (a 500-billion health surplus, the wealth tax, kata). It highlighted that, breaking with earlier practice, the government is submitting the budget in the autumn. Its kata analysis focused on the pension entitlement of kata taxpayers.

Government-critical conservative band. Magyar Nemzet wrote in a frame of “tax rises and unfulfilled promises”. It highlighted the uncertainty around the family allowance, the benefits promised to pensioners and the VAT cut on fruit and vegetables, and, as its own information, that the government may also be considering raising the corporate tax from 9 to 15 per cent. Its kata article reported the price-rise concerns of interest groups. Mandiner’s material was not in the processed set.

6.2 Facts and data

Data Value Source
2026 deficit (amended plan) 7.5% of GDP Portfolio, 17 October 2026 (statement by András Kármán)
2027 deficit considered acceptable by investors 4.8–5.5%, median of expectations c. 5.2% Telex, 19 October 2026
Analysts’ deficit expectations for 2027 Standard Chartered 5%, Capital Economics 5.5%, Equilor 5.7% Telex, 19 October 2026
Market estimate without new measures c. 6% Telex, 19 October 2026 (analyst model calculation)
Adjustment target 3% by 2030 Telex, 19 October 2026
Illustrative fast path (2026–2030) 7.5 → 4.8 → 3.8 → 2.8 → 3% Telex, 19 October 2026
Illustrative gradual path (2026–2030) 7.5 → 6 → 4.5 → 3.5 → 3% Telex, 19 October 2026
Energy subsidies (utility price cut) c. 2% of GDP Telex, 19 October 2026 (investor estimate)
Wealth tax net wealth above HUF 1 billion; 1%, 1.5% above HUF 100 billion; expected revenue c. HUF 200 billion/year Portfolio, 17 October 2026; Index, 18 October 2026
Wealth-tax payers 15–25 thousand people, c. 0.3–0.5% of taxpayers Telex G7, 19 October 2026
Tax-burden gap between deciles the burden of the top decile is 6–8 pp lower than that of the bottom one (2020 data) Budapest Institute, 2022 (quoted by Telex G7)
Effect of the tax credit on the minimum wage 6 pp reduction in tax burden Judit Krekó (Telex G7, 19 October 2026)
New kata: benefit base HUF 108 thousand → HUF 317 thousand per month (2027), minimum wage from 2028 Portfolio, 16 October 2026
New kata: monthly itemised tax double the current HUF 50 thousand; turnover ceiling HUF 22 million Magyar Nemzet, October 2026; Portfolio, 16 October 2026
Additional health funding HUF 500 billion Portfolio, 17 October 2026

6.3 Policy dimensions

  • Economy (programme points) — the medium-term deficit path and the pre-election funding rule (G23, G15 counter-cyclical fiscal stabiliser, i.e. public spending in a downturn and saving in an upswing), separate reporting of the energy-price subsidy (G1, G25), and the wealth tax and the tax burden on capital income (G3, G7, G8);
  • Social policy (programme points) — the targeting of the utility subsidy (SZ1) and the effect of the new kata on entrepreneurs’ future pensions (SZ13); the question of pension indexation is not a subject of this analysis;
  • Demography (programme points) — the distributional effect of family tax allowances, which the tax-burden report also shows by family type (DM2).

6.4 Literature in detail

6.4.1 International Monetary Fund: World Economic Outlook 2025

In the section on debt sustainability, the policy chapter of the IMF’s autumn 2025 report puts credibility first. According to the report:

“Governments should publish medium-term fiscal frameworks with clear anchors, preannounced adjustment paths, and contingency plans to manage shocks.”

In the same place, the volume also writes that consolidation requires strong rules, well-equipped independent fiscal institutions and greater debt transparency. A footnote in another chapter notes that governments may also try to stimulate the economy before elections by loosening financial conditions. Translated to the Hungarian 2027 plan: the 2030 target of 3 per cent falls in an election year, so the “pre-announced path” is worth something only if the end point is placed before the election and a separate funding rule applies to the months before the election. Proposal 3.1 links these two elements.

📖 Source: IMF: World Economic Outlook — Global Economy in Flux (2025)

6.4.2 International Monetary Fund: World Economic Outlook 2023

Box 2.3 of the IMF’s autumn 2023 report models how energy subsidies, tax cuts and price caps affected inflation and expectations in the euro area. According to the model, the measures lowered euro-area inflation by 0.9 percentage points in 2022 and by 0.5 percentage points in 2023, but after their phase-out they caused higher inflation in 2024–2025 than in the scenario without subsidies. In the report’s words:

“Temporary energy subsidies directly lower inflation today but increase it relative to the no-measures scenario after they expire.”

The volume also stresses that if actors regard the subsidy as temporary, the expectation of higher future inflation can already affect price-setting today. The Hungarian utility price cut is a permanent, not a temporary subsidy, but the logic is the same: part of the measured inflation figure stems from the subsidy. If the subsidy is ever restructured, this difference will appear in the price index. The indicator under proposal 3.2 makes this difference visible in advance. That way decision-makers will not be caught by surprise on the price-stability criterion of euro adoption either.

📖 Source: IMF: World Economic Outlook — Navigating Global Divergences (2023)

6.4.3 Thomas Piketty: Capital in the Twenty-First Century

In the chapter on international data on income inequality, Piketty describes how from the 1990s and 2000s several tax authorities stopped publishing detailed tax statistics. Paradoxically, in the information age it became harder in some countries to follow the evolution of the highest incomes than in the 20th century. He assesses this as a loss of democratic transparency. In the chapter on the wealth tax, he argues that one of the most important benefits of a low-rate wealth tax is that it provides official data, produced by a method prescribed by law, on the distribution of wealth. That way citizens do not have to rely on magazine rankings and unofficial estimates. The situation in the Hungarian debate is the same: both the government and its critics refer to 2020 data from a 2022 research study. The annual report under proposal 3.3 would supply the official tax statistics that Piketty finds missing. The introduction of the wealth tax is at the same time an opportunity to make the tax burden of the top wealth stratum measurable too.

📖 Source: Thomas Piketty: A tőke a 21. században (Capital in the Twenty-First Century)

6.5 International comparison

Wealth tax in Europe. According to Index’s opinion piece, Austria, Denmark, Germany, the Netherlands, Finland, Luxembourg, Iceland and Sweden have phased out the general wealth tax, and in France it was replaced by a real-estate wealth tax. According to the author, in these countries wealth is typically taxed at inheritance. This experience shows the importance of efficient tax collection and accurate wealth registration. The official tax-burden report (3.3) serves this too.

The structure of the tax system in the region. Dániel H. Nagy, a partner at Forvis Mazars, told G7 that the Hungarian tax system combines the highest VAT rate in the European Union with a low SZJA and the lowest corporate tax rate in the Union. Of the region’s 25 countries, apart from Hungary only Romania and Bulgaria have a flat-rate SZJA without a tax credit or a tax-free band. In such a structure, the distribution of the total tax burden can be judged only together with VAT and capital income. That is why proposal 3.3 needs every type of tax.

Energy subsidies in the euro area. The IMF’s 2023 model (6.4.2) examined the euro area’s energy-price measures of 2022–2023. What they had in common was that they temporarily lowered measured inflation and raised it after they were phased out. Hungary is facing euro adoption, so this experience is particularly important: in assessing convergence, the price level without subsidies also counts.

Economy

  • G1 — Data-driven budget
  • G3 — Simplification and progressive reform of the tax system
  • G7 — Wealth-inequality monitoring
  • G8 — Progressive capital-income taxation
  • G15 — Counter-cyclical fiscal stabiliser
  • G23 — Government-debt sustainability framework
  • G25 — Energy-price-shock preparedness plan

Social policy

  • SZ1 — Targeted support
  • SZ13 — Pension adequacy and sustainability

Demography

  • DM2 — Family-support impact assessment

Proposed new programme point: Pre-election funding rule — in the 12 months before a parliamentary election, a new permanent spending increase or tax cut only with an offsetting measure of the same amount named in the same law, with a public opinion of the Fiscal Council — for the Economy area.

6.7 List of sources

Press sources (MIAK press monitor, 19 October 2026 — topic 1):

Knowledge-base references (books):

  • 📖 IMF: World Economic Outlook — Global Economy in Flux (2025)
  • 📖 IMF: World Economic Outlook — Navigating Global Divergences (2023)
  • 📖 Thomas Piketty: A tőke a 21. században (Capital in the Twenty-First Century)

MIAK internal materials:

  • MIAK policy area: Economy (programme points; programme point IDs: G1, G3, G7, G8, G15, G23, G25)
  • MIAK policy area: Social policy (programme points; programme point IDs: SZ1, SZ13)
  • MIAK policy area: Demography (programme points; programme point ID: DM2)
  • MIAK press monitor, 19 October 2026 — topic 1, score: 97/100

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