Curia: TAO constitutes public money

October 25, 2017

Curia: TAO constitutes public money
Photo: Facebook/Viktor Orbán

The Curia, Hungary’s highest court, has ruled that TAO contributions, which are given by companies to sports clubs in Hungary in lieu of corporate tax, constitute public funds. The ruling is legally binding and upholds an earlier second-level court ruling.

Anti-corruption NGO Transparency International Hungary filed a lawsuit against the Ministry of Human Resources and the Ministry for National Economy to make public the data related to the TAO program, arguing that the tax deductions which corporations receive from the government in exchange for their donations are so significant that those funds constitute public money. The Curia’s decision obliges the sports clubs to disclose how much money they receive in donations and from which companies.

TAO, introduced by the government in 2011, allows corporations to pay a portion of their corporate income tax towards a sports association or sports club and deduct that amount from their corporate income tax payment. Major disparities in the amount clubs receive under the scheme, however, have given rise to suspicions that the payments often amount to little more than “tributes to political leadership,” leading to calls for greater transparency.

“We know that a total sum of approximately HUF 300 billion, which is just over USD 1 billion, has gone missing from the state treasury over the past five years since this program has been running,” said Miklós Ligeti, legal director for Transparency International Hungary, in March. Ligeti said that, based on their calculations from publicly accessible information, an average sports club in Hungary received around HUF 4-5 million (USD 18,000-22,000) through TAO.

“There are, however, some privileged sports clubs which one might call ‘champions’ in terms of how much TAO funding they receive,” Ligeti continued. “The top recipient football association is located in the township of Felcsút, which is the hometown of the prime minister. Its share of the TAO cake amounts to some HUF 11.2 billion (USD 43 million) — that’s roughly 200 times more than what the average club receives.”

Prime Minister Viktor Orbán earlier dismissed as “communist thinking” the idea that the potential corporate tax revenues diverted to private sports clubs represent public funds.