Fidesz bracing for a tight election race in 2022 as Orbán makes it rain

The government started sending out its latest national consultation last Thursday. The questions concern migration, Brussels, raising the minimum wage, the income tax rebate for carers of children, and even one of the government's old bogeymen, George Soros, has made his return to the questionnaire. One of the most important items on the consultation is, without question, the income tax rebate, an essential part of Fidesz's upcoming election campaign.

Early June, Viktor Orbán announced that if economic growth reaches 5.5 percent this year, then in January-February 2022, carers of children will receive a tax rebate of as much as they paid in 2021. The rebate will be capped at 800,000 forints (nearly €2,300), the tax level of the average income, so a two-income household could start the election year with a 1.6 million forint bonus from the government. The estimated total cost of the rebate is 550-580 billion forints.

Two basic snags

The government is tying this payment to economic growth. The Ministry of Finance initially expected 4.3 per cent growth this year but now thinks 5.5 per cent is realistic, and the government plans to give the difference back to families. However, it might seem risky to dangle the prospect of this 800,000 Forint present in front of crisis-stricken families — what if the economy fails to reach that target?

The external circumstances may be favourable, but there are ominous signs. In Great Britain, for example, they have postponed the reopening for weeks because of the Covid Delta variant. There is no consensus among Hungarian scientists about a possible fourth wave in Hungary, although the Slovak government expressed fears that the Hungary-Portugal match, played in a stadium at total capacity, might have ignited the Delta variant in the region. Another spike in coronavirus cases and a renewed lockdown would have a significant negative impact on economic growth. It would be a curiosity in political and contemporary history if Orbán were to suddenly walk back on pouring a pile of free money over 1.1 million families because growth didn't reach 5.5 per cent.

However, no one expects this to happen; our sources in the NER (the System of National Cooperation, as Fidesz calls its political regime) say it is unimaginable that the government would not pay out the money it had promised.

Firstly, they have faith in the economic data — even economists critical of the government think 5.5 per cent growth is achievable.

In the previous quarter, economic growth was already 2 per cent, which was good by EU standards. In the second, third and fourth quarters, internal demand is expected to pick up considerably, accelerating postponed investments. It is not so far-fetched to expect 5.5 per cent growth because the crisis caused by the pandemic has created a very low baseline for the economy (in 2020, it fell 5.2 per cent compared to the previous year).

However, there are two essential hitches relating to the payment. First, as economic news site Portfolio pointed out, making this payment in January or February could be difficult, as the Central Statistical Office only announces the expected level of GDP growth for 2021 in the middle of February, and there has not usually been an official figure by January, when the parents should be receiving the first instalment of 400,000 forints. Secondly, as Portfolio wrote, "it will be interesting to see if the National Tax Office will have this year's tax returns available when they are usually not approved until May 20".

Clear and unambiguous support

There is a further condition for the payout, one riskier than growth, and that is public support.

"I believe this is an ingenious, fair, and modern idea, but we will put it up for national consultation because it's better to win people's clear and unambiguous support for a solution that has never been tried before," said Orbán on national radio.

That support cannot be taken for granted. Two opinion polls on this have been published with a surprisingly large difference in results.

The survey by Pulzus Research, which has no ties to the government, showed that 52 per cent of Hungarians reject the rebate for different reasons. A survey by government-friendly Századvég said 79 per cent of people supported the unparalleled handout. Both sets of researchers said their surveys were representative.

It is worth looking at the difference between the surveys, even if it does not entirely explain the divergence in the results. The Pulzus research was carried out through a phone app, while Századvég used a phone questionnaire. The differing platforms will have reached different kinds of audiences, and they also asked their questions in different ways.

"The government is preparing to return the income tax paid in 2021 (up to the average wage) to carers of children at the beginning of 2022. What do you think about this idea," Pulzus asked. "Do you agree or disagree that after the coronavirus crisis, parents looking after children, earning the average wage or less, should get a refund for the income tax they paid in 2021, provided that the country's economic growth makes this possible, i.e., reaches 5.5 percent," ran the Századvég question.

Both questions distort the issue in their phrasing. The phrasing of the former does not exactly induce warm connotations in its original Hungarian version. At the same time, Századvég's mentions of "economic growth" and “refund” might imply that the measure does not cost anyone anything, although childless taxpayers will also be footing the bill for the money paid to families. Although both surveys' results could be accurate, they would only reveal the actual level of support if the questions were symmetrical, with arguments for and against, rather than a statement of the obvious set against some assertion eliciting an emotional response.

Serious rejection on the horizon

Naturally, Fidesz conducted its own surveys, for internal use only, which show that 60 per cent of the population supports the measure, one government analyst revealed to Telex. In the voting groups that are important for Fidesz, the support is "overwhelming".

Yet the planned handout is clearly stirring up serious opposition as well.

Firstly, in the Pulzus survey, 40 per cent said that they oppose the step because they see it as a way of buying votes just before the election. Secondly, as we have written in the Telex "Like Championship", a weekly series about politicians' social media activity, it is revealing that even Orbán's own followers found his Facebook post about the measure laughable, although that is hardly based on a representative sample.

It is no accident that the handout has provoked such antipathy. The total of nearly 600 billion forints would not be paid as a means-tested benefit — well-off families (such as Orbán's) would get the same as poorer families, and those earning less than the average wage will get even less back. The pandemic hit those working in the service sector extremely hard, especially those working in restaurants — the hotel chain run by groups under Orbán's plumber friend Lőrinc Mészáros had dismissed more than half of its employees. Others have burned through their savings or were forced to close their enterprises, yet the government offered them no real help for a long time.

In addition, the unemployed did not pay any income tax, so they have nothing to get back. If one were to say that they have not received sufficient state support, that could mean the government has made them losers two times over.

An unprecedented handout

Politically, Orbán's handout is interesting for several reasons. The national consultation on this extremely strong campaign tool is taking place in summer, the political silly season. However, this summer is different — the politicians are not having their usual break. The opposition is gearing up for its autumn primaries, campaigning all around the country, and this latest national consultation is the government's response to that.

Fidesz's research over the summer will lead to political measures in the autumn session of parliament, followed perhaps by the handout at the beginning of next year. The January-February payments could also be handy for the government, our sources say, because generally, governments do well in the polls in the December before an election, but support can dip in the following three months. So it will be interesting to see what effect the 600 billion forint handout will have on Fidesz's popularity.

But this is not the government's only method for winning votes; Fidesz is trying to appeal to several other demographic groups with large benefits in early 2022, right before the elections:

• Those under-25 will be exempt from income tax,
• the income tax rebate will benefit those in their thirties and forties,
• changes to the pension system are designed to win the support of the elderly.

All this would affect about 4.5 million voters. One government source estimated that 60-65 per cent of these groups could be persuaded to vote for Fidesz, which would mean 3 million votes. Then there is also the promise of the 200,000 forint minimum wage, which the government thinks will affect 850,000 people.

Orbán's handouts are significant because they indicate how much tighter Fidesz expects the 2022 elections to be, compared to 2014 and 2018. In 2014, the government got the multinationals to pay for its key campaign weapon (the reduction in domestic bills), while in 2018, migration was the winning theme, along with a distribution of potatoes and vouchers. In 2022, however, the opinion polls suggest the expected unity of the opposition could make this a far tighter contest.

The translation of this article was made possible by our cooperation with the Heinrich Böll Foundation. Parts of this article have been brought up to date to reflect the fact that the national consultation had already commenced since the publication of the original Hungarian version.