Protests in Hungary against tax hike for small businesses

Several thousand people demonstrated in the Hungarian capital last week against a planned government increase in income tax for small business owners and the self-employed, the KATA. The tax hike coincides with rapidly rising inflation, which now stands at nearly 14 percent.

Protesters in Hungary’s capital Budapest on July 13, 2022 (AP Photo/Anna Szilagyi)

On Friday, several thousand protesters marched through downtown Budapest for the third day in a row. Thousands of people had already taken to the streets on Tuesday evening, blocking two major bridges over the Danube for hours.

Those affected by the tax increase are small business owners or the self-employed, who usually earn little more than employees. Actors, artists, journalists, bicycle couriers and others took part in the protests. About three-quarters of those hit are expecting drastic increases in their tax bills and thus a reduction in their net income. The Association of Tax Consultants predicted a reduction in net income of 20 to 40 percent. About 450,000 freelancers will be affected by the increase starting in September.

KATA was introduced in 2013; the flat tax was intended to relieve small business owners who earned no more than €30,000 a year. They deducted about €120 per month to cover taxes and did not need a tax adviser or accountant when declaring their income tax, which also saved costs.

The protests enjoyed great support, as it is clear the tax increase is only the beginning of widespread attacks on the entire population of the country.

Pajak