Revenues and Expenditures Relating to State Assets

Rationale

This is the largest expenditure line in the chapter and the analytically heaviest: 60,500.0 millió Ft of capital injected into the portfolio of companies whose ownership rights the NGM exercises. It must be read against the matching revenue line — 94,805.2 millió Ft of dividend income from the same NGM portfolio. The portfolio earns more than this line costs. That fact cuts both ways. It means the state's company holdings are not uniformly loss-making; some are genuinely profitable enterprises. It also means the state is recycling: it draws 94,805.2 millió Ft of dividends out of the portfolio and pushes 60,500.0 millió Ft of fresh capital back in. The reform question is not whether the portfolio earns — parts of it plainly do — but whether the state needs to *own* it to capture that value, and whether the capital recycling is funding genuine investment or absorbing the losses of the weaker companies in the portfolio. The classical-liberal reading distinguishes the two halves. A state-owned company that is genuinely profitable on a hard budget constraint is a candidate for *privatisation*, not subsidy: selling it returns capital to the Treasury, removes the company from the reach of political direction, and exposes it to the discipline of private ownership — and the proceeds are real, one-off revenue the reform programme can use. A state-owned company that needs the capital injection to cover operating losses is exhibiting the soft budget constraint: it survives not because it creates value but because the shortfall is met from the dividends of the profitable companies and from general taxation. Aggregating both inside a single 60,500.0 millió Ft line obscures which is which. Until the portfolio is itemised company by company, the line cannot be shown to fund anything the analytical frame recognises as a necessary state function — and 60,500.0 millió Ft is too large a discretionary capital allocation to default to Keep on the strength of the portfolio's aggregate dividend yield. For a worker at the roughly 540,000 Ft median monthly gross wage, the labour-tax wedge that part-funds general expenditure of this kind is not the visible payroll deduction alone. Counting the employer-side SzocHo (13% on gross, paid before the worker ever sees the wage), the 15% SZJA and approximately 18.5% employee social-insurance contributions on the declared gross, and then the 27% ÁFA applied to a large share of what the remaining take-home buys: the gross employer cost is 113% of the declared gross; the worker's net-of-SZJA-and-contributions take-home is roughly 66.5% of that declared gross, or 58.8% of full employer cost; and if approximately 70% of take-home income is spent on 27% ÁFA-bearing goods and services, a further 13–14 percentage points of employer cost is absorbed in consumption tax — yielding a combined all-in wedge in the 55–60% range.[^8] The 60,500.0 millió Ft on this line is drawn from that take. The wage-earner funding a capital injection into a state enterprise portfolio cannot identify which company received the money, cannot vote on it as a shareholder, and receives no dividend from it — the dividends flow back to the Treasury, not to the taxpayer whose labour funded the equity.

Rationale

This is rent the central state pays to house its own offices. It is a real operating cost of government and cannot be abolished — ministries and agencies must be located somewhere. It is classified Keep because the function (premises for the apparatus) is genuine, but it carries a sharp efficiency observation rather than a phase-out. The state simultaneously owns a large property portfolio (the maintenance line above) and pays 28,871.0 millió Ft in rent to house its bodies. Some of that rent is paid into the private market; some is an internal transfer where one arm of the state rents from another, which is accounting circulation rather than economic cost. A genuine reform would consolidate the occupied-space footprint as the apparatus itself shrinks under the reform programme: fewer agencies and a smaller headcount mean less floor area, and this line should fall in step. The cut here is a second-order consequence of cutting the bodies, not a first-order decision about rent.

Rationale

This line maintains and physically secures the property the state actually owns. Whatever one concludes about whether the state *should* own a given building, while it owns the building it must keep the roof on it and the doors locked — an unmaintained asset loses value, and value lost is taxpayer wealth destroyed. This is the irreducible custodial cost of the existing portfolio. The honest reform is not to stop maintaining state property; it is to shrink the portfolio (see the sales-revenue discussion below and the bérleti díjak line), at which point this line falls naturally because there is less to maintain. Classified Keep on the current portfolio, with the explicit note that its correct long-run size is a function of how much property the state divests.

Rationale

This is a direct operating transfer to the Nemzeti Filmintézet (National Film Institute, NFI), the body that administers Hungary's film-support architecture. It is separate from, and additional to, the indirect tax-rebate scheme: the indirect system's deposit account (letéti számla) was set at 70 milliárd Ft for 2026, down from 81 milliárd Ft in 2025, and funds the 30% rebate on direct Hungarian production costs.[^1] The 11,800.0 millió Ft here is the institutional subsidy that keeps the Institute itself running and finances its direct production grants. Film production is a commercial activity. It has a price, a market, paying audiences, private investors, and — through the rebate scheme — an existing voluntary-finance channel where producers raise money against expected returns. A subsidy of this kind funds a particular cohort of producers whose projects clear the Institute's selection process; the decision about which films get made is a subjective allocation of resources by an administrative body, made without the price signal that paying audiences would provide. The classical-liberal reading is straightforward: where a market exists and a voluntary-finance channel already operates, the case for an additional involuntary transfer is weak. The question is not whether Hungarians value film — many do, and reveal it by buying tickets and subscriptions — but whether the optimal slate of Hungarian films can be determined by a state selection panel rather than by audiences spending their own money. It cannot; no panel can aggregate the dispersed preferences of viewers without the transactions that reveal them.

Rationale

This is the operating subsidy for MNV Zrt. itself — the apparatus that manages the "entrusted" property portfolio. MNV is a company with 300-499 employees.[^3] Its existence is a function of the size of the state's property holdings: the larger the portfolio the state insists on owning, the larger the administrative body needed to manage it. This inverts the usual framing. MNV is not a service the taxpayer buys; it is the overhead cost of the state choosing to be a major landlord and asset-holder rather than divesting. The classical-liberal reform is not to abolish asset management while keeping the assets — someone must hold the keys — but to shrink both together: a divestment programme that sells the non-strategic portfolio reduces the management burden proportionally, and a smaller residual portfolio of genuinely strategic holdings can be managed by a correspondingly smaller body. The 10,000.0 millió Ft operating subsidy should fall on the same schedule as the portfolio shrinks, because the apparatus is sized to the portfolio. It is classified Phase-Out rather than Keep because the management mandate at its current scale exists only to administer a portfolio that the reform programme reduces; the apparatus is not a permanent rights-protection function.

Rationale

This line funds environmental remediation that the state owes as the owner of contaminated or environmentally hazardous property — legacy industrial sites, former state enterprises whose liabilities passed to the state, land where the state is the responsible owner. This is not discretionary green spending; it is the discharge of a liability the state already carries. An owner who has caused or inherited contamination owes remediation to the parties harmed by it — neighbouring landowners, groundwater users, future occupants. That is a rights-protection obligation: the harm is involuntary, often irreversible, and falls on identifiable parties who did not consent to it. Refusing to fund it would not abolish the liability; it would shift an uncompensated harm onto third parties. Classified Keep as the honouring of an existing ownership liability, with the standard operating-efficiency caveat that remediation should be competitively tendered.

Rationale

The companion line to the one above — capital expenditure routed specifically through the Nemzeti Tőkeholding, the consolidated state capital-fund holding established in 2023.[^7] The same analysis applies: this is the state operating as a venture and growth-capital allocator using involuntary tax finance, in a sector where a private capital market already operates and where the absence of the allocating officials' own capital at risk removes the discipline that makes venture investing function. The 2023 consolidation rationalised the administration of the state's capital funds; it did not change the underlying question of whether the state should be deploying taxpayer capital as venture equity at all. The new-fund structure the Holding uses requires a minimum 30% private co-investment[^7] — which is itself an admission that purely state-allocated venture capital is problematic, and which raises the question of why the remaining up-to-70% state share is needed if private investors are willing to commit alongside. Where private capital co-invests, the market is already functioning; the state tranche is crowding in on deals private investors have already validated.

Rationale

An undifferentiated "other" asset-management line of 8,000.0 millió Ft. A budget category labelled only "egyéb" (other) is, by construction, spending the budget document does not specify — and unspecified discretionary allocation inside a state asset-management chapter is exactly where the analytical frame presses hardest. Without a stated purpose, the line cannot be shown to fund a rights-protection function, a constitutional precondition, or a response to irreversible harm. The burden of demonstrating necessity sits with the line, and a residual catch-all cannot discharge it. Some portion is genuine residual transaction cost attached to portfolio operations; that portion would survive itemisation and reallocation to the specific lines it belongs to. The classification is Phase-Out rather than Immediate Cut to allow one budget cycle for the genuine residual operating costs hidden inside the aggregate to be identified and migrated to named lines.

Rationale

This line, together with the Nemzeti Tőkeholding line below, funds the state acting as a venture-capital and private-equity investor through capital funds (tőkealapok). The Nemzeti Tőkeholding group was created in January 2023 to consolidate the state's partly or wholly state-backed capital funds under one roof.[^7] The state placing equity into venture and growth-capital funds is a clear instance of the calculation problem in the domain where it bites hardest. Venture investing is the business of allocating scarce capital across competing, uncertain projects on the basis of judgements about future returns — judgements that, in a market, are disciplined by the investor's own capital being at risk and by the price signals of competing private bids. A state capital fund allocating tax-sourced money faces neither discipline directly: the officials selecting the investments do not own the capital, and the returns (or losses) accrue to the budget rather than to them. Where the state fund crowds into deals private venture capital would also fund, it displaces private investors without adding capital to the economy; where it funds deals private capital declined, it is, by revealed preference, funding the projects the market judged not worth the risk. A private venture-capital and private-equity market operates in Hungary — Invest Europe data for 2022 recorded 39 active funds and approximately €420 million in new investment in Hungarian portfolio companies[^9] — and the case for an involuntary, tax-financed parallel allocator alongside it is weak.

Rationale

This line provides the national co-financing and pre-financing the state must put up to draw down EU project funds, and it matches a revenue line — 5,900.0 millió Ft of "az Európai Uniós finanszírozású projektek megelőlegezéseinek visszatérülése" (return of pre-financing on EU-financed projects). The two lines net to zero: the state advances the co-finance and recovers the pre-financed portion. While Hungary participates in EU cohesion and development programmes, the national co-financing obligation is a binding parameter of that participation — a contractual condition of funds already programmed. It is classified Keep as the honouring of in-flight programme commitments, with the standard observation that the underlying question of EU-funds participation is a policy choice made elsewhere, not in this asset-management chapter. Within this chapter the line is a near-neutral pass-through.

Rationale

This line funds the state *buying* property and other assets — that is, the state expanding its portfolio. The analytical direction of the reform programme is portfolio reduction: divest the non-strategic holdings, shrink the management apparatus, return capital to taxpayers. Fresh acquisition spending runs against that direction. The chapter already shows the state is a substantial property *seller* — 18,500.0 millió Ft of budgeted ingatlan-értékesítés revenue — so the portfolio is being actively traded; this line is the buy side of that trading book. There can be a narrow genuine case for acquisition (consolidating a holding, acquiring a parcel needed to make a divestment block saleable), but acquisition at scale, in a chapter whose reform logic is divestment, is not a default Keep. Classified Phase-Out over 2 years to allow in-flight purchase commitments to complete while ending new state-portfolio expansion.

Rationale

When a person dies without heirs in Hungary, the estate passes to the state (állami öröklés — escheat). This line funds the costs the state incurs administering, valuing, and settling those estates — and the chapter's revenue side shows the matching 2,484.0 millió Ft of operational and 276.0 millió Ft of capital proceeds from estates the state then realises. Escheat is a genuine residual function of the legal system: property must have a legal owner, and where no private heir exists the state's role as default successor avoids ownerless assets falling out of the legal order entirely. The administrative cost of executing it is a real cost of that rights-and-property-order function. Classified Keep with the operating-efficiency caveat; it is essentially self-financing against the matching revenue line.

Rationale

A technical line settling VAT arising on the chapter's property transactions (sales, rentals, purchases). It is an accounting pass-through, not a discretionary programme — the state, transacting in property, incurs and reclaims VAT like any other market participant. Classified Keep as a mechanical tax-accounting line; it falls automatically as the volume of state property transactions falls under the divestment programme.

Rationale

A standard chapter-level contingency reserve. A modest reserve against in-year contingencies in the management of a large property and enterprise portfolio is a defensible budgeting practice; the amount, at 1,000.0 millió Ft against a 174,620.8 millió Ft chapter, is proportionate and not a vehicle for concealed discretionary spending. Classified Nominal Freeze: hold the nominal allocation, and real-terms erosion at typical inflation reduces its real weight over the decade. As the chapter's overall envelope shrinks under the divestment programme, the reserve should be resized down in step at a future budget cycle.

Rationale

This line settles obligations arising from the state's past decisions as an owner — guarantees called, contractual liabilities crystallising, settlements owed to counterparties of earlier state transactions. These are liabilities already incurred; the budget line is the discharge of a debt, and the state is bound to honour contracts it entered in good faith with private counterparties. Refusing payment would be a rights-violation against those counterparties. Classified Keep as the honouring of existing contractual obligations.

Rationale

Budget transfers to companies the state owns through MNV. A state-owned company that needs an annual budget transfer to operate is, by that fact, not covering its costs from its own revenues. The transfer is the visible side of the soft budget constraint — the company faces no hard consequence for running at a loss because the shortfall is met from general taxation rather than from the discipline of either profitability or insolvency. A company permanently dependent on a subsidy is one whose continued existence the market has not validated. The amounts here are small, but the principle scales: the size of a line is not a criterion for its classification. Either the company can be made to operate on a commercial basis — the New Zealand SOE Act 1986 reconstituted every government trading entity as a commercial enterprise with an independent board, a hard dividend obligation, and standard accounting, after which the SOE sector's dividend revenue rose sharply[^5] — or, if it cannot, the activity does not have a demonstrated economic rationale and the company should be wound down or sold.

Rationale

A capital allocation to companies held under the Magyar Turisztikai Ügynökség (Hungarian Tourism Agency). Tourism is a thoroughly commercial sector: hotels, attractions, tour operators, and marketing services all have prices, paying customers, and active private markets. A state-owned company in this sector requiring a budget capital injection is operating inside that competitive market while drawing on involuntary tax finance — which both signals that the company is not self-sustaining and places its privately-owned competitors at a disadvantage they did not earn. The seen side of the transfer is the recipient company; the unseen side is the private tourism operator competing against a subsidised rival, and the taxpayer with no stake in either. Classified Phase-Out to allow the recipient company an orderly transition to commercial operation or sale.

Rationale

A small undifferentiated "other" line attached to the NGM ownership-rights block. As with the larger "egyéb" asset-management line, an unspecified residual category cannot be shown to fund a named necessary function. The amount is minor, but the principle is the same one applied to the 8,000.0 millió Ft line: unspecified discretionary allocation is classified for itemisation and reallocation, not defaulted to Keep.