Tax Law Amended Amid Extensive Protests

The government majority of Hungarian Parliament passed the modification of the KATA (Lump sum tax of small enterprises) tax law, which means that from September, workers paying tax according to this tax regulation, will only be allowed to work for private individuals – except for taxi drivers who are indicated as exemptions in the modified regulation.

The motion was tabled on Monday, debated on Tuesday, and after a few hours of debate, the parliament voted 120 in favor, 57 against and one abstention to pass the new KATA law.

This will affect more than 300,000 of the 400,000 or so private entrepreneurs, who will either switch to another tax bracket or give up their previous jobs. In parallel to the debate on the bill, spontaneous demonstrations took place in several parts of Budapest, with protesters blocking Margaret Bridge and part of Elisabeth Bridge.

The parliamentary government majority argued that the KATA law was originally designed for small individual entrepreneurs, but later more and more people started using it as a disguised employment.

The opposition has pointed out that for small entrepreneurs, who now work in parallel for individuals and companies as well as institutions, a change in the law from September will make their business model impossible. They also pointed out that it could force hundreds of thousands of Hungarian workers to cheat on their taxes or close down for good.

A range of professional and civil society organizations are also protesting against the proposal.