Hungary faces economic shifts with price cap removal and tax reforms

Hungary is undergoing significant economic and tax policy shifts. As the government prepares to phase out price caps on certain goods, Csaba Bubenkó, president of the Egyenlő.hu trade union, warned that the removal must not result in retailers passing all costs to consumers. He noted that consumer spending has declined for two consecutive months and suggested that the government should secure guarantees from companies to ensure that savings from the price cap are used for wage increases for retail workers or to support local producers.

Simultaneously, the government has announced changes to the 'kata' taxation system. The proposal allows non-primary individual entrepreneurs, such as students and retirees, to opt for this simplified taxation method starting January 1, 2027. However, the ruling Fidesz party has criticized the move, claiming the reforms disproportionately burden low-income workers—such as hairdressers and taxi drivers—by doubling their tax obligations, while providing significant financial advantages to high-earning business leaders.