Taxes in the tens of billions to be diverted to sport associations in opaque manner.

December 17, 2014


The minister responsible for keeping Hungary’s deficit to under 3.0 percent of GDP and reducing the country’s national debt has submitted last-minute bills to parliament that would allow for hundreds of billions of forints in taxes to be diverted from public coffers to sport associations in an opaque manner.  Why he would do so is difficult to fathom, especially in light of massive spending cuts to education, health care and social services.

A number of sports associations are run by prominent Fidesz politicians and their associations.  Perhaps they hold the answer to this myserty.

The Hungarian parliament is due to adopt a series of last-minute bills today, including a so-called “salad bill” submitted by Mihály Varga, Minister for National Economy, purporting to “regulate the use of public monies”.

Having passed a budget on Monday that provides for sport associations to receive HUF 54 billion from corporations in the form of 100 percent tax-deductible donuations, Varga now proposes to modify laws regulating this so that the beneficiary associations needn’t disclose how much they received or how it was spent.

Varga has also proposed to modify rules regulating on-line gambling so as to require licensed operators to conclude agreements with sports associations prior to taking bets on sporting events.  He proposes that any fees or royalties be deducted from gambling taxes they are already required to pay.

Daily economic online points out that Hungary’s two authorized casino and on-line gambling operators, Andy Vajna and Gábor Szima Jr., are allowed to deduct certain fees from their taxable income.  Socialist MPs Tamás Harangozó and Bertalan Tóth believe the real purpose of the agreements is to divert tax revenues from the public purse to sporting associations and “to the pockets of certain exceptional individuals”.

As in the case of corporate donations, sport associations will not be required to disclose the contents of these agreements to the public, nor account for the use of any funds received in this manner. The reason offered for this by the bill’s framers is that sport associations are civil organizations and that, for this reason information, about their operations and contracts needn’t be made public.

Harangozó and Tóth believe the proposed modifications mean gaming operators will not be required to disclose the terms of contracts concluded with sport organizations.  LMP co-chair András Schiffer believes the proposed changes serve the interests of a small circle of businessmen with close ties to Fidesz.