Hungary’s Orban Scraps Income Tax for Young Voters Before Crucial Election

(Bloomberg) -- Hungary plans to exempt young adults from paying income tax in a move widely seen as a push by Prime Minister Viktor Orban to win over the youth vote ahead of parliamentary elections next year.

The plan, targeted at anyone under the age of 25, would come into effect by the start of next year, just before Hungarians vote to decide whether to grant Orban a fourth consecutive term. The exemption may apply up to the average wage but the government has yet to decide the exact threshold.

Young voters are the worst demographic for Orban and one where the opposition has a commanding lead over his Fidesz party, according to a Median poll published last year. Orban, who describes his politics as “Christian conservative,” has drawn criticism from his allies in the European Union over crackdowns on civil liberties and a decade-long campaign to consolidate power.

“This move is not surprising when polls indicate the Fidesz party’s low support among young voters,” said Andras Biro-Nagy, director of the Budapest-based Policy Solutions research institute.

Orban’s plan, which he said would cost as much as 150 billion forint ($508 million) annually, is similar to one approved in Poland in 2019. Croatia followed last year with a personal income tax exemption for those under 25, ostensibly to cut so-called “brain drain” tied to young people emigrating abroad.

Orban said the tax break is part of other measures aimed at accelerating an economic recovery from the Covid-19 crisis, which the government projects led to an economic contraction of 6.4% in 2020.

Still, the timing before the vote is telling. Fidesz polled at 22% among those aged 18-30 compared with 40% for the opposition, according to a Median poll from November. Fidesz led 44% to 33% among those older than 30.

A majority of polls taken in the past month showed Fidesz now trailing the opposition, which is uniting for the first time in a parliamentary vote to try to unseat Orban.