Hungary: Unconstitutional Property Tax

The Hungarian Constitutional Court has found a new property tax unconstitutional. The tax was introduced by the outgoing Parliament as a personal tax on middle-to-high value properties and high value cars, yachts a planes. The Court found the property part unconstitutional, leaving in place the tax on the vehicles, and making the tax contribute to the Hungarian deficit as collection costs will be higher than the income.

The Court had been very timid on tax issues, which are the sole competence of the legislation, up until 2006. In the past three years the court has became highly politicized, and made a number of rather populistic decisions. While a former property tax on very high value properties was also found unconstitutional, an extra levy on banks and later on energy companies went through.

The new judiciary activism makes one of the most complex, fastest changing and least comprehensible tax system even more unpredictable. The tax was deemed to be short-lived: the opposition which is about 45 points ahead the government two month before the general elections has promised to abolish the tax and pay back the first payments with all the interests.