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5th Jul 2022

Hungary to pay EU fines via new tax on own citizens

  • Hungarian leader Orban is also being scrutinised by his own centre-right EPP group in the European Parliament (Photo: consilium.europa.eu)

Hungarian authorities will pass on the cost of EU fines through a tax on its own citizens whenever it breaches EU law.

Giving details of the new Hungarian initiative, EU justice commissioner for justice Vivian Reding told euro-deputies at the Strasbourg plenary session on Wednesday (17 April) that: “in practice citizens would be penalised twice: once for not having had their rights under EU law upheld and a second time for having to pay for this."

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The so-called ad hoc tax was introduced into Hungary’s latest constitutional reform in March, its fourth in the past 15 months.

The latest changes are said to undermine the rule of law by limiting the power of the constitutional court.

Hungary denies the charge.

But the commission wants it to repeal rules that entitle the president of a judicial administrative body to decide where cases should be tried, to repeal the ad-hoc EU fine tax, and to scrap restrictions placed on political adverts during election cycles.

The Venice Commission - an expert body composed of former constitutional judges in the Strasbourg-based Council of Europe - and the European Parliament are also drafting separate reports on Hungary, both of which are due by the EU assembly's June plenary

Hungarian Prime Minister Viktor Orban in a letter addressed to commission chief Jose Manuel Barroso on 12 April said they will review the two issues but did not comment on the ad-hoc tax.

For her part, Reding noted that she has drafted a bundle of infringement letters against Hungary but that she is waiting for Orban's response on the ad-hoc tax issue - due by May - before sending them out as a single package.

“We will not wait until June before we come out with … infringement proceedings,” she said.

The constitutional changes, among others, were pushed through a parliament which is dominated by Orban’s centre-right Fidesz party.

The two-thirds Fidesz majority has made the Hungarian assembly dance to its tune since 2010, with civil liberty groups saying the Orban government is abusing its position of power to entrench its power and conservative values.

Outspoken critic, Belgian liberal leader Guy Verhofstadt, told fellow MEPs the commission should remove Hungary’s voting rights in the council under a never-before-used rule for countries said to breach EU values.

“The commission should launch the procedure without delay, or else we in the parliament should have the courage to do it ourselves,” he said.

Meanwhile, the threat of a commission fine on Hungary is looming as Budapest has yet to implement in practice a November decision by the EU court in Luxembourg to reinstate judges who were forced into early retirement.

The outstanding issue dates back to another set of two infringement procedures launched against Hungary last year.

Reding in late March asked Hungary’s justice minister to detail the number of judges who have been reinstated.

The Hungarian justice minister replied in April but gave only figures of how many judges and prosecutors have been affected, not reinstated.

Hungary had until 6 January to implement the court’s decision on the judges but missed the deadline by about three months.

While the rules have since been amended, a handful of Hungarian judges informed the commission last week they have yet to be reinstated.

“Here we can launch an infringement as well which could lead to immediate fines,” an EU official close to the issue told this website.

Under Hungary's new law, the fine, if imposed, would be the first to be passed on to the Hungarian tax payer.

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