On October 6th, Hungary’s wealthiest citizens learned that they would soon be subject to a progressive wealth tax, in keeping with a campaign promise made by Prime Minister Peter Magyar and his center-right ruling party, Tisza. Tisza defeated the far-right Fidesz party — led by former Prime Minister Viktor Orbán—in Hungary’s April election, ending a sixteen-year illiberal reign that left the country racing to fill a 7.5 percent budget deficit.
Prime Minister Magyar’s proposal for January 2027 calls for a 1 percent tax on Hungarians whose wealth exceeds the threshold of 1 billion forints ($3.08 million), and a 1.5 percent tax on the excess wealth of those who have more than 100 billion forints ($308 million). The proposal encompasses all types of assets—real estate, company holdings, and even assets held outside Hungary. Magyar's announcement comes at a critical time when Hungary is recommitting to the European Union and its NATO obligations, ending the Orbán government’s combative relationship with both institutions. Simultaneously, Magyar is trying to improve the quality of life for Hungary’s citizens, especially pensioners. Poverty rates for pensioners more than doubled during the period from 2018 to 2023, highlighting the wealth gap prevalent during the Orbán government’s tenure. It must be noted that during this period, the upper middle class and upper class in Hungary experienced significant growth in wealth. Regarding household financial wealth, the top 10 percent of earners owned 72 percent of household financial wealth in 2023.
A progressive wealth tax on Hungary’s wealthiest citizens is a promising start to addressing the corruption and income inequality which grew under the Orbán government. This is significant news in a country whose wealthiest face little taxation on their fortunes. Tisza expects that this will boost GDP growth by 0.1 percent. While this shows that Tisza is fulfilling a major campaign promise, there are still fiscal challenges that lie ahead for Hungary, in addition to remaining in compliance with the EU fiscal rules.
Keeping campaign promises pertaining to domestic issues is not the only area where Tisza is excelling. In September, the European Commission announced that €4.2B in cohesion funds would be unlocked after determining that Magyar’s government met the necessary conditions for upholding EU rule-of-law. These funds had been frozen in December 2022 due to concerns over corruption in the Orbán government. Receiving these funds was not the only benefit Hungary received. The European Commission also restored Hungarian access to Erasmus, the student exchange program which allows students to study in another European country without paying additional tuition, and Horizon Europe, which provides critical funding for research projects in areas such as climate change and technological innovation. Hungary regaining access to both Erasmus and Horizon Europe provides two more ways of EU reintegration and the ability to fully partake in opportunities that other EU members already have. It also provides two more incentives for continuing anti-corruption efforts and adhering to EU rule-of-law.
In a press release published on July 9th, the European Commission announced that Hungary would be the 25th member state to join the European Public Prosecutor’s Office (EPPO). Hungary requested EPPO membership in May 2026. This is a significant step towards restoring the rule-of-law and shows that the country under Tisza is serious about making reforms. The EPPO investigates and prosecutes financial malfeasance as it pertains to the EU budget. It means that the investigative body will have a permanent presence in the country, and will be able to investigate financial crimes that took place after June 1, 2021, when the EPPO was established. The presence of the EPPO in Hungary is a safeguard to ensure EU funds are used properly and spent toward programs that benefit the people.
Hungary’s new progressive wealth tax is a step in the right direction in terms of closing the 7.5 percent budget deficit and addressing the income inequality which had become widespread under the Orbán government. It also shows Hungarians that the Magyar government under the Tisza party is keeping their campaign promises and serious about addressing the pressing issues they face. By addressing corruption and continuing to adhere to the EU rule-of-law, Hungary is showing the EU that it is a responsible member state and ready to receive not only the €4.2B in previously frozen funds, but also access to programs such as Erasmus and Horizon Europe. These programs can provide students and researchers with the opportunities and funds to improve the quality of life in Hungary.
While Tisza is taking massive steps forward, work needs to continue to foster economic growth and tackle corruption. The presence of the EPPO in the country will help maintain fiscal accountability, and it will be important for the Tisza government to ensure the conditions are conducive to conducting investigations as needed, such as hiring competent personnel and not obstructing ongoing investigations. Instituting a progressive wealth tax to tackle the budget shortfall shows that Tisza is listening to its voters. It also has a cascading effect in terms of its relationship with the EU by showing Brussels that Hungary is taking genuine steps toward anti-corruption reform. Put together, these actions are a promising start toward Hungary’s full reintegration into the EU.
Staff Editor: Caden Umansky
Managing Editor: Emma Hopp
