Protesting a law amendment proposed by the Hungarian government and approved by the Hungarian parliament days later, some took to the streets in the capital last week, and protests continued this week as well. Food couriers on bicycles and scooters and representatives of other trades adversely affected by the change in legislation had planned to fill the streets of the entire city, but in the end they only blocked some bridges in the centre of Budapest.
Background
The demonstrations, supported and partly organized by the Hungarian political left, were held against a recent amendment of the small businesses tax law. They were originally designed to protest at the modification of the law on the Small Taxpayers’ Itemized Lump Sum Tax (KATA); however, they soon turned into anti-government stunts. The protests encouraged by leftist parties began last week, with one of the opposition formations, the Two-Tailed Dog Party, organizing an event on downtown Elizabeth Bridge on Thursday with the goal of blocking it to traffic in both directions in the early morning rush hour. Soon enough, leaders of other opposition parties started to show up, to piggyback on the event, with failed prime ministerial candidate Péter Márki-Zay taking the imaginary floor to exhort protesters, and, as he did as a rule during the parliamentary election campaign, to insult the voters of the ruling party in the process, calling them ‘idiots’.
Turnout and Incidents
The Thursday protest did not attract a large number of people to begin with, and despite the attendees’ pledges to hold out indefinitely, towards the end of the night their numbers were reduced to mere hundreds. At one point, some smaller groups started to scream abuses at the police officers securing the demonstration. The lawmen had to remove a drunk woman from the crowd for rowdy behaviour. She resisted arrest and even assaulted an officer – which made the other protesters even more excited. According to press reports, they started to argue with the police over the method of the detention, and eventually tried to prevent the police’s vehicle from taking the woman to the police station. It was also reported that someone threw beer bottles at police cars from the bridge. Police officers also detained a man at the rally, for violating the freedom of association and assembly. The left-wing media attempted to depict this and some other subsequent incidents as instances of police violence, but with little success.
Towards the end of the night their numbers were reduced to mere hundreds
Alternative Taxes
While the left is trying to rally people to protest the tax amendment, arguing that by scrapping certain advantageous aspects of the tax many will be essentially deprived of their livelihoods, in reality there are still numerous, similarly favourable alternatives for small entrepreneurs. The Niveus Consulting Group has published an analysis of the changes and the types of alternative taxation solutions available. Under the new regulations, the income ceiling under which KATA will be applicable will be raised to HUF 18 million. Another key modification is that only self-employed individuals who provide their services or sell their products to private individuals can continue to choose the KATA taxation. Also, those who have a full-time job beside having a small business will not be eligible for this type of taxation in the future. While understandably many are upset about the changes, as they cause inconvenience, there is little awareness about other forms of almost equally advantageous taxation forms, such as flat-rate taxation,
The tax can even be 10 per cent depending on the entrepreneur’s activity
Flat-rate taxpayers have to pay taxes and contributions on the basis of their income calculated according to the presumed cost ratio applicable to their activity. The tax base is calculated on the basis of the income of the entrepreneur, taking into account the level of costs set by law. The tax is based on 60 per cent of income in the default case, but can even be 10 per cent depending on the entrepreneur’s activity. A private entrepreneur who opts for flat rate taxation does not have to pay personal income tax on income below half the annual minimum wage.
So while there is a lot of discontent regarding the new amendment, the issue has been politicized from the start and few press reports have acknowledged that there are still opportunities for people to choose beneficial tax rates for their businesses. Not to mention the fact that the reason why the amendment was introduced in the first place was to exclude those who abused the KATA law, cheating the government out of millions of tax forints.
