What are the practical implications of the tax package outlined in the TISZA program?

1. Starting point: not austerity, but structural rebalancing

According to the TISZA program, the primary objective of tax policy is not to increase state revenues through tax hikes, but rather:

• reducing taxes on labour and entrepreneurship,
• making the tax system more equitable;
• as well as creating fiscal room for manoeuvre from non-tax sources (eliminating corruption, repatriating EU funds).

This is an important difference compared to current Hungarian practice, where in recent years fiscal balance has been achieved to a significant extent through inflation-driven and consumption-based (VAT) revenues, as well as sector-specific taxes.

In the TISZA program, all of this is implemented as part of the “Tax Reduction+” package, not as a one-off measure, but through gradual reductions in parallel with economic growth.

Below we summarise the currently known plans regarding taxation.

2. Personal income tax: fairness as the guiding principle

A revision of the current flat-rate personal income tax system will be placed on the agenda:

• A 9% personal income tax would be payable instead of the current 15% on the full monthly minimum wage (HUF 322,800).
• Above the minimum wage, up to the median wage (HUF 625,000/month), a progressively increasing personal income tax liability would be expected to apply.
• Above the median wage, the 15% rate remains unchanged.
• At present, there is no talk of the restructuring of targeted tax incentives.

3. Wealth tax: introducing a new revenue pillar

One of the most concrete tax-related commitments in the program is the “billionaires’ wealth tax,” which would not constitute a general tax but rather a targeted measure applying exclusively to the highest wealth bracket. Based on current communications, the aim is not to burden the broader population, but to increase the contribution of exceptionally large fortunes; the expected fiscal impact could amount to several hundred billion forints annually.

At the same time, the program does not set out the detailed rules: the exact threshold for the wealth tax (for example, net wealth above HUF 1, 2 or 5 billion), the applicable tax rate or rates, and the methodology for asset valuation are also not specified.

According to tax expert opinions, one possible scenario is that the wealth tax would apply to net wealth above HUF 1 billion at an annual rate of 1%. Such a structure could, according to estimates, generate annual revenues in the range of HUF 300–600 billion. However, it is very important to emphasise that these are estimates only and not an officially announced plan.

4. VAT: indirect easing, not shock therapy

According to the TISZA communication, VAT policy does not focus on a general rate reduction, but on targeted measures aimed at easing the cost of living. Based on the most recent announcements, VAT on prescription medicines would be fully abolished (0%), reducing healthcare costs, particularly for elderly and chronically ill patients. In addition, the VAT rate on firewood and certain healthy staple foods would be reduced from the current 27% to 5%, directly easing households’ utility and everyday living costs. The TISZA program emphasises that these measures would be implemented in a targeted and prioritised manner, while a systemic reduction of the standard VAT rate is not currently envisaged.

5. How will all of this be financed? – the relationship between tax policy and the budget

According to the program, financing would not come from traditional tax increases:

6. Summary

TISZA does not position itself as a traditional “tax-cutting government,” but as a driver of structural reform.

• In the short term:
  • legal certainty;
  • anti-corruption measures;
  • fiscal stabilisation.
• In the medium term:
  • reduction of taxes on labour;
  • a wealth-based contribution to public finances,
  • and reduced dependence on VAT.

It is important, however, that the programme indicates directions, not draft legislation. The tax details – and thus the substantive effects – will become known in the first months of government.