Political corruption in Hungary

According to estimates the size of the Hungarian untaxed economy (unreported profits from black market businesses as well as from "questionable activities") is staggering--about 3,700 billion forints a year. Of the 3,700 billion forints, about 1,000 billion forints disappear into people's pockets as the result of outright corruption. Hungary, it should be noted, is not among the most corrupt countries in the world. It is only middlingly corrupt. Transparency International studied 180 countries in 2006 and Hungary ranked 39th. Gallup, on the other hand, studied 101 countries and Hungary tied with Kyrgizia in 78th place.

If you ask Hungarians (Gallup, 2007) which segment of society is the most corrupt, they will first cite the medical profession, followed by politicians. Two-thirds of those asked believe that "something must be given" to people working in health care. Forty percent of the population think that a little money under the table will help in dealing with parliamentary members, local council members, or officials of ministries. One-third of Hungarians think that they can pay off policemen or auditors coming from the Hungarian equivalent of the Internal Revenue Service. Twenty-five percent think that even teachers can be bribed. Judges are lucky: only twenty percent believe that they are corrupt enough to accept money for the "right" judgment.

But let's return to political corruption. The real problem is party finances. Parties, depending on their size, receive a pitiful amount from the budget. Around 300 million forints on average, while everybody knows that in order to keep up the organization and wage campaigns the parties need and spend at least ten times that amount. Individual politicians are also suspect. After all, their pay is low and yet some of them have managed to accumulate considerable wealth. Interestingly enough, one seldom hears anything about political corruption cases in Hungary. Or if one hears something, like Viktor Orbán's vineyards in Tokaj, there are no consequences. Here is an interesting case: the Audi-A4 of  Péter Szijjártó.

Fidesz found out that both the minister of finance and his undersecretary received new Audio-A6s costing 16 million forints each. An outcry ensued: at the time of a financial crisis how do they dare buy new luxury cars? Indeed, the timing was unfortunate, but apparently the cars that were traded in had over 300,000 kms on them and spent more time in the repair shop than on the road. The minister of finance's car even broke down while János Veres was in the company of a foreign dignitary. Yes, I understand that this purchase didn't look good even if the cars were ordered in August, before the world economic crisis hit Hungary. So Fidesz took advantage of this God-given opportunity.

Fair enough. But I don't understand why Szijjártó agreed to be the "hatchet man" in this latest campaign against the government. It turns out that Szijjártó is the president of a women's basketball club and that the club had been leasing a 2006 Audi-A4 for him for at least three years. That "old" Audi (I assume at the end of the lease) was recently replaced with a 2009 model. The first problem with the free car is that the basketball club has received subsidies from the city of Győr. Szijjártó, in addition to being a member of parliament, is also a member of the Fidesz-led Győr city council. He of course voted several times for financial assistance to his favorite sports club.

The second problem is whether the use of the car for non-business purposes should be taxable. In the U.S. we know that it is. Tom Daschle, though already nominated for the post of secretary of health and human services, had to bow out because he "forgot" to pay taxes on the free use of a car and chauffeur. The Hungarian tax code seems a bit murkier. According to the accountant Népszava asked, if Szijjártó received the car from the city as an official vehicle for a council member then the city would pay taxes on it, but this way nobody pays anything. As usual, I'm confused about Hungarian law--in this case, the tax code. I can imagine all kinds of taxes the city could pay on the car, but would they add the use of the car to the council member's taxable income? As long as it's designated for official business, this would make no sense. Just think if Obama had to pay taxes on Air Force One!

Szijjártó's excuse is that for his work in the club (I can't imagine what kind of work he can do there) he receives no pay and this car is in lieu of a salary. But if it is in effect earned income it should clearly be taxable. In defense of another charge (did he lie on his required financial disclosure statement as a member of parliament?), Szijjártó can argue that he is not the one who leases the car, the car is not registered in his name, and therefore he doesn't have to list it on his yearly compulsory financial disclosure form. Here I would side with him that the car should not be listed as an asset. But his annual taxable income is still a major question, and that should be disclosed.

Szijjártó, who is almost never speechless, became red faced and was barely able to mutter a few coherent sentences when confronted with the fact that he drives an Audi-A4 that is a gift from the women's basketball club. I think he knows that this is a serious problem. Supporters of MSZP bitterly complain about how bad "the party's and the government's communication" is. What they mean by this, among other things, is that they don't exploit such opportunities as Szijjártó's car. MDF, on the other hand, seems to be more on the ball. The party called on Szijjártó to resign. They spoke boldly and unequivocally: "this is nothing else but corruption and tax evasion." MDF called on Fidesz to reveal all gift cars received by Fidesz parliamentary members. "The question is what the companies who are providing these cars receive from Fidesz in exchange." Fidesz of course didn't answer. This is where we stand and will forever and ever (or at least for two weeks). As some people say, Hungary is a country where there are no consequences.

Comments

[Odin's lost eye]

Professor you say in your article *** “Two-thirds of those asked believe that "something must be given" to people working in health care.” ***
Ye Gods (and little fishes)! I suspect that this can be traced back to what I will call ‘Red Men’s times’ where money could buy you influence and perhaps better treatment. Now-a–days I understand that some ‘Senior Consultant’ expects a ‘little something’ up front. This is disgusting! Give the ward or hospital something if you must but NOT those whose duty it is to do the work.
When a patient is discharged or dies in the UK it is usual to give the ward staff (nurses) a box of chocolates. When my father died I gave the two ward sisters who looked after him silver plated belt buckles –for their uniform waist belts. It was what he wanted me to do.
Politicians both National and local are always suspected of being corrupt. Those I knew back in the old days would have been outraged if any one had the affrontery to offer a bribe. My father, who was a local councillor, would have probably have ‘ripped their head off’. Local officials however can sometimes be bought. I was once asked “was it possible to hide transactions in the computerised books of account as there was need to hide the ‘Reptile Fund’ used for future ‘store development’”. My reply was a very loud “no”.
Professor you also talk about party funding. In your country (and mine) parties are funded by their supporters and not by Government. There are very strict rules about how much can be spent at an election and who can be paid for what. The present government was publically criticised by the Head of the Civil Service for trying to publish a ‘party political’ document as a Government Pamphlet. The stink went on for weeks!
Most of the ‘work’ in a party is done by the party faithful who work as volunteers (no pay, bring your own tea,sugar and milk). Why do the taxes of persons who dislike party ‘A’ or party ‘B’ have to contribute to its functioning? Let those who support the party put their hands into their own pockets and not mine!
As an aside I would love to know more about the affair of the ‘Tokaj vineyards’ it sounds intriguing and probably quite sordid.
Corruption (which has to be proven beyond all reasonable doubt Mr Op) degrades the state where it flourishes, destroys democracy, denies the rule of law and allows the sort of ‘Gangster activity’ which occurred recently in Veszprém to flourish.
How to stamp it out? Aye there is the rub! Changes in the fundamental structures of the state, independent audits, a totally independent (and experienced) judiciary and exemplary punishments for those getting caught either offering or taking bribes.

[childhood obesity]

shame that a country so beautiful have'nt enough laws!I like this article you teach teacher and a face that many of us did'nt know!

[Term Papers]

this is very bad.. in a well developed country, it dosent suit..