The Hungarian Constitutional Court has struck down as unconstitutional a proposed bill that would cap severance pay to all public-sector workers. The proposed legislation would have taxed all severance income over 2 million forints ($10,190) at 98 percent; this would have been applied retroactively from Jan. 1 of this year.
The ruling Fidesz party reacted fiercely to the Oct. 26 ruling. The right-wing administration has responded by introducing a proposal that would limit the court’s jurisdiction on economic issues, such as taxes and tariffs.
The severance pay cap was one of many austerity measures undertaken by the Fidesz party to reduce Hungary’s deficit at the behest of the International Monetary Fund. The IMF insisted on reducing a tax levy on the financial, telecommunications, energy and retail industries.
On Oct. 25, the Parliament passed legislation allowing the state to withhold pension contributions for up to 14 months to help meet European Union and IMF-approved budget deficit targets.
