Hungary 2016

Constitutional Court, out of whose current 14 members 11 were appointed by the ruling party Fidesz`s parliamentary majority, is further on upholding numerous contentious laws as constitutional. A study as of March 2015 by three CSOs - Eötvös Károly Institute, Hungarian Helsinki Committee and Hungarian Civil Liberties Union – found out that the number of laws approved by the CC in high profile cases rose considerably upon the establishment of pro-Fidesz majory in it. CC is anyway prevented of assessing financial or taxation laws. In June 2016, in “András Baka case”, ECHR in Strasbourg ruled that the replacement (with adjacent events) of the President of Supreme Court as of late-2011 was a violation of the right to access to a court and of the freedom of expression. According to

The more stable Fidesz is in government, the more disturbing are changes to the democratic fabric of Hungarian society. High level corruption has taken firm roots. It is more often initiated by political factors than by businesspeople. Tax evasion by big companies linked to the ruling elite is tolerated by financial authorities. Illicit lobbying by domestic or foreign companies - e.g. as seen through a “Bunge case” as of spring 2016 - is far reaching. Transparency of public procurement transactions and infrastructural investments is decreasing due to obstructed or legally limited public access to information. Hungary fell in the Transparency International`s Corruption Perception Index 2015, sharing (with 3 other) the place 50 of 168 countries, while its score fell from 54 to 51 –

The treatment of asylum seekers and Syrian or other war refugees has indeed become a dark spot, following police brutality against refugees, and construction of a multiple barbed-wire fence and a “transit zone” at the Hungarian southern border. Hungary is at the lead of central European countries which refuse to accept the inner-EU quotas for reception of refugees. The anti-immigrant rhetoric of the Prime Minister resembles hate-speech. Verbal abuse of refugees, foreign companies, NGOs, women, Romany, various religious communities, etc, is anyway widespread and not condemned as anti-social behavior. In December 2015, the government officials took part in a “culture war” over a sexist remark by a celebrity, protecting the abuser and adding additional discriminatory remarks. As ECHR

Elections in Hungary are considered as free and fair. However, a few unresolved issues during the last couple of years undermined fairness of the electoral process and political life in the country. Most important are: division of electoral districts allegedly in favor of the ruling Viktor Orbán’s Alliance of Young Democrats – Hungarian Civic Union (Fidesz) party; the fact that expatriated native citizens don’t have equal voting rights as the ones who have never lived in the country but have the citizenship; and, the unequal access to media. Paid advertisements by political parties are forbidden in private media since 2013, and the only place for competition are public media outlets, where Orbán and his associates, as office holders, always have had far more presence during the

Hungary doesn’t have unconstitutional organizations or individuals who have veto power, thus elected authorities hold effective control over the country. System of checks and balances exists on paper, but 2/3 majority in parliament that Fidesz and the Christian Democratic People’s party coalition had till recent by-elections (see section Free and Fair Elections) was often used for domination of executive over the judicial branch. Anticorruption measures targeted mostly low- and mid-level corruption but corruption on higher level of authority, especially in the public procurement, is a big problem. Companies of many people close to Viktor Orbán, including his son-in-law Istvan Tiborcz and a wealthy businessman Lorinc Meszaros, were awarded with large contracts from the state.

Wide range of “tools” is used to limit freedom of the media in Hungary. Press is partly free due to large political pressure, partisan allocation of state advertising and concentration of media ownership. Main regulatory body, the National Media and Info-communications Authority (NMHH), is often criticized, for being biased in favor of the ruling parties, which appoint members of the NMHH, as well as for failing to ensure independence of the public broadcasters. A dispute between Viktor Orbán and an oligarch Lajos Simicska, owner of several media outlets, changed two things. First, the reporting by Simicska’s outlets became critical of government after years of pro-government reporting, and secondly, it forced the ruling party to increase ownership share in private media outlets,

Property rights are largely protected in Hungary, but they are not always adequately secured. While the country´s legal system still was ranking high in that area in 1990 (7.25), it has suffered a huge decline since then (2015: 6.10). Executive power can influence court proceedings to benefit the political elite or connected third parties, resulting in low judicial independence. Examples of this are the acquisition of private pensions from citizens of Hungary (although with compensation in the shape of public social security pensions), as well as it is the introduction of industry-specific special taxes. Their retroactive implementation poses a significant threat to the rule of law and property rights. These moves were clear violations of private property. However, the EU regulation

The size of government in Hungary is exuberant, reaching 50% of GDP in 2015. As one famous Hungarian economist put it, Hungary is a premature welfare state - providing numerous services to its citizens, but without economic foundations for that. Large public sector stifles growth with high taxes necessary to finance it: the VAT level is set at 27% (the highest in the EU and higher than the maximum level approved by the European Commission, 25%), while the total tax wedge on labour is standing at 49% (with only Belgium, Germany and Austria having higher rates). Personal income tax is flat, but accompanied with high social contributions. Corporate tax rate is set at 19% (10% for small companies). Fiscal deficits that accumulated high public debt of 75,5% of GDP have been put under control,

Business regulation is overall favourable to conducting business. However, the biggest problems of the Hungarian business environment include policy instability, inefficient government bureaucracy and, in the field of taxation, both tax regulation and tax rates. Starting a business is inexpensive and quick, but with high minimum capital requirements. Obtaining a construction permit involves many procedures, but is inexpensive. Getting electricity is a long process due to inefficiency of the utility company. There are regulations which are purposefully written in a way to provide rents to private companies with ties to influential politicians (e.g. legislation limiting working hours of retail shops). Some administrative procedures include legal services from lawyers, which are very

Freedom of trade is generally upheld in Hungary, which has been an EU member state for more than a decade and as such applies its common trade policy. Tariffs are overall low, excluding the agricultural sector where they can be significant for some products. Non-tariff barriers in trade are more important, with complicated and expensive certification and standardization. Geographical features, as well as high quality public transport infrastructure, significantly lower freight cost, positively influencing trade. Hungary has actually set an efficiency frontier in dealing with necessary export / import documentation. Main trade partners of Hungary are found on the EU internal market. Its most important partner is Germany. The Russian Federation is another important partner due to