As the country’s richest municipality, Budapest, like several other local councils, is required to pay a solidarity contribution totalling 57.8 billion forints (EUR 154.6m) to poorer localities, Varga said.

The mayor refuses to pay this contribution mandated by the central government, so he filed a lawsuit with the Budapest Municipal Court challenging its legality, which has now been rejected, the minister said. Varga said the mayor, Gergely Karácsony, inherited 214 billion forints in reserves from his predecessor, István Tarlós, in 2019, but had by now “bankrupted the capital”.

The municipal council has exhausted its reserves despite having record high tax revenues, with business tax revenues set to exceed 271 billion forints this year, Varga added.

The Budapest Municipal Court has rejected a lawsuit filed by the city’s mayor with the aim of “dodging” the payment of the solidarity tax, Finance Minister Mihály Varga said on Wednesday.

This lawsuit has now been rejected in a first-instance decision on the grounds that the court did not have the authority to examine the lawfulness of the treasury’s procedures, Karácsony said.

“This is a chilling interpretation of the law, as even the Fundamental Law states that the courts have the authority to examine the legality of public administrative actions,” the mayor said.

He said that in “substantive court proceedings” the city council could prove why the amount and collection of the solidarity contribution was unlawful. But the first-instance decision, he said, was meant to absolve the court of having to take a position in the matter.

“I can only hope that the decision wasn’t issued due to political pressure,” Karácsony said.