Budapest Court rejects Mayor's lawsuit over solidarity tax payment

Budapest council is required to pay a solidarity contribution totalling 57.8 billion forints (EUR 154.6m) to poorer localities.

Finance Minister Mihály Varga said on Wednesday that the Budapest Municipal Court has rejected a lawsuit filed by the city’s mayor with the aim of “dodging” the solidarity tax payment. 

As the country’s richest municipality, Budapest, like several other local councils, is required to pay a solidarity contribution totalling 57.8 billion forints (EUR 154.6m) to poorer localities, Minister Varga said. The mayor refuses to pay this contribution mandated by the central government, so he filed a lawsuit with the Budapest Municipal Court challenging its legality, which has now been rejected, the minister said. Varga said the mayor, Gergely Karácsony, inherited 214 billion forints in reserves from his predecessor, István Tarlós, in 2019, but had by now “bankrupted the capital”. The municipal council has exhausted its reserves despite having record-high tax revenues, with business tax revenues set to exceed 271 billion forints this year, Varga added. Karácsony said on Facebook that the city council will appeal the court’s decision. He noted that the municipal council had filed a lawsuit against the state treasury more than a month ago over the 12-fold increase in the solidarity contribution payable to the government. This lawsuit has now been rejected in a first-instance decision on the grounds that the court did not have the authority to examine the lawfulness of the treasury’s procedures, Karácsony said. “This is a chilling interpretation of the law, as even the Fundamental Law states that the courts have the authority to examine the legality of public administrative actions,” the mayor said. He said that in “substantive court proceedings” the city council could prove why the amount and collection of the solidarity contribution was unlawful. But the first-instance decision, he said, was meant to absolve the court of having to take a position in the matter. “I can only hope that the decision wasn’t issued due to political pressure,” Karácsony said.