Sectoral special taxes in Hungary as instruments of a populist fiscal policy: a legal analysis

Hungarian economic and fiscal policy in the last decade has applied a number of unconventional instruments. However, their classification as populist policy instruments is far from certain. This is also true in case of the sectoral special taxes greatly favored by the Hungarian administration, in particular the progressive taxes imposed on the turnover of corporate taxpayers. The latter type of special taxes keep their fiscal objectives concealed, and their regulation is affected by certain hiatuses, which make identifying their genuine characteristics a difficult task. The legal analysis presented in this article reveals that, contrary to the objectives declared for these taxes in national legislation, the Hungarian turnover-based special taxes enable an arbitrary surplus taxation of certain targeted corporate taxpayers. They are required to bear a share of the public burden without the regulation of the taxes ensuring that they objectively have the necessary financial capacity. This is a finding that general analytical frameworks of policy populism can adequately use when determining whether turnover taxation in Hungary is an instrument of a populist fiscal policy.