Die Neue Zeit
31st December 2010, 22:07
http://www.economist.com/blogs/easternapproaches/2010/10/hungarian_politics (Economist article)
HUNGARY is transfixed by an unprecedented political battle. In one corner, the constitutional court, the highest legal body in the land. In the other, the centre-right Fidesz government, which has enjoyed virtually unlimited political power since it won a two-thirds parliamentary majority at a general election in April. Or at least it did until Tuesday morning, when the court threw out a law that would apply a 98% tax to all public-sector severance payments over 2m forints ($10,000), backdated to January 1st 2010. The court argued, reasonably enough, that such retroactive legislation would breach employee contracts and was unconstitutional.
Round one to the court. But Fidesz reacted with fury. By Tuesday afternoon János Lázár, the leader of Fidesz in parliament, had drafted legislation to remove the court’s jurisdiction over the state budget, taxes and other financial matters. Fidesz’s huge majority would ensure a smooth passage for the new law, which probably would have passed within a few days. Round two to Fidesz.
Or, perhaps, not, for it seems this time the party may have overreached itself. If the court refuses to back down, Hungary could lurch into a constitutional crisis. This would be bad enough at any time, but Hungary takes over the rotating presidency of the European Union in January. Brussels and other European capitals are looking askance at Budapest. Speed-editing the constitution is not the example Hungarians' fellow Europeans want to see the country setting for its neighbours still trying to join the club, such as Croatia and Serbia.
The opposition parties, naturally, are up in arms. András Schiffer, leader of the green-liberal party Politics Can Be Different, accused Viktor Orbán, the prime minister, of using methods suited to Kazakhstan. In a rare display of opposition unity Mr Schiffer and Attila Mesterházy, leader of the Socialists, have asked Pál Schmitt, the Hungarian president, to intervene. But Mr Schmitt, a former Fidesz MEP, is unlikely to oblige.
More unusually, the conservative daily Magyar Nemzet, normally a strong supporter of the government, ran an article [link in Hungarian] criticising Fidesz's move. Officials respond that the tax has wide public support and will put an end to enormous public-sector payouts that have been the subject of scandal. That may be true, but it will also hit ordinary teachers, policemen, and civil servants.
But perhaps the most worrying aspect of the government's move is the way it fits a pattern of arbitrary decision-making set by the government since its election. There seems little room for the opposition in Fidesz's relentless pursuit of what it describes as national unity and co-operation. Earlier this month the government announced a crisis tax on the energy, telecommunications and retail industries, all of which have substantial foreign holdings. Together with a new bank tax, this package should raise $2.67 billion a year for three years, helping pay for the government’s planned cuts in income and corporation tax. In fact the government’s real fear, says Krisztian Szabados of Political Capital, a think-tank, is that the constitutional court will throw out the crisis taxes, tearing a massive hole in the budget.
Bashing foreign investors is usually popular in Hungary and these extra business taxes will not dent the government’s popularity. There are few votes in reminding the electorate that it was foreign capital which kickstarted Hungary’s moribund economy in the early 1990s, which has brought tens of thousands of jobs and which has nurtured Hungary’s nascent middle class. But Hungary needs more of it—and these latest shenanigans are unlikely to help.
HUNGARY is transfixed by an unprecedented political battle. In one corner, the constitutional court, the highest legal body in the land. In the other, the centre-right Fidesz government, which has enjoyed virtually unlimited political power since it won a two-thirds parliamentary majority at a general election in April. Or at least it did until Tuesday morning, when the court threw out a law that would apply a 98% tax to all public-sector severance payments over 2m forints ($10,000), backdated to January 1st 2010. The court argued, reasonably enough, that such retroactive legislation would breach employee contracts and was unconstitutional.
Round one to the court. But Fidesz reacted with fury. By Tuesday afternoon János Lázár, the leader of Fidesz in parliament, had drafted legislation to remove the court’s jurisdiction over the state budget, taxes and other financial matters. Fidesz’s huge majority would ensure a smooth passage for the new law, which probably would have passed within a few days. Round two to Fidesz.
Or, perhaps, not, for it seems this time the party may have overreached itself. If the court refuses to back down, Hungary could lurch into a constitutional crisis. This would be bad enough at any time, but Hungary takes over the rotating presidency of the European Union in January. Brussels and other European capitals are looking askance at Budapest. Speed-editing the constitution is not the example Hungarians' fellow Europeans want to see the country setting for its neighbours still trying to join the club, such as Croatia and Serbia.
The opposition parties, naturally, are up in arms. András Schiffer, leader of the green-liberal party Politics Can Be Different, accused Viktor Orbán, the prime minister, of using methods suited to Kazakhstan. In a rare display of opposition unity Mr Schiffer and Attila Mesterházy, leader of the Socialists, have asked Pál Schmitt, the Hungarian president, to intervene. But Mr Schmitt, a former Fidesz MEP, is unlikely to oblige.
More unusually, the conservative daily Magyar Nemzet, normally a strong supporter of the government, ran an article [link in Hungarian] criticising Fidesz's move. Officials respond that the tax has wide public support and will put an end to enormous public-sector payouts that have been the subject of scandal. That may be true, but it will also hit ordinary teachers, policemen, and civil servants.
But perhaps the most worrying aspect of the government's move is the way it fits a pattern of arbitrary decision-making set by the government since its election. There seems little room for the opposition in Fidesz's relentless pursuit of what it describes as national unity and co-operation. Earlier this month the government announced a crisis tax on the energy, telecommunications and retail industries, all of which have substantial foreign holdings. Together with a new bank tax, this package should raise $2.67 billion a year for three years, helping pay for the government’s planned cuts in income and corporation tax. In fact the government’s real fear, says Krisztian Szabados of Political Capital, a think-tank, is that the constitutional court will throw out the crisis taxes, tearing a massive hole in the budget.
Bashing foreign investors is usually popular in Hungary and these extra business taxes will not dent the government’s popularity. There are few votes in reminding the electorate that it was foreign capital which kickstarted Hungary’s moribund economy in the early 1990s, which has brought tens of thousands of jobs and which has nurtured Hungary’s nascent middle class. But Hungary needs more of it—and these latest shenanigans are unlikely to help.