Budapest Airport turns to the Constitutional Court over land tax
Budapest Airport has submitted a petition to the Constitutional Court of Hungary, as the airport operator believes that it has been the subject of a disproportionately large increase in land tax this year.
Budapest Airport’s view is that the sudden and disproportionate increase in local land tax violates constitutional principles.
According to Budapest Airport’s submission, the amount of land tax levied by the municipalities of Budapest District XVII and XVIII in 2012 violates the constitutional principle of the proportionate sharing of public burdens. The airport operator has therefore asked the Constitutional Court to adopt a position on the matter. In addition to local business tax, Budapest Airport is due to pay 2.25 billion HUF (!) in land tax this year alone, which amount is 330% of last year’s obligation. According to the airport operator’s legal position, the municipalities in question determined the amount of land tax in an undifferentiated manner and at a disproportionately high level. Ferenc Liszt International Airport has an area of 1515 hectares, most of which belongs to the administrative area of the municipalities managing the two capital districts.
Budapest Airport’s legal representatives emphasized that, due to the nature of its operation and its safety and security obligations, the airport must possess large areas of land which cannot be used for other purposes, such as agricultural production. Consequently, the land tax levied on the airport should have been determined in a proportionate manner, taking into account the ability of the company to bear public burdens. Budapest Airport is anyhow the largest taxpayer in the southern Pest region, having paid no less than 7 billion HUF into the central budget and to local municipalities in various taxes last year. On top of this, since the change of ownership in 2006 the airport operator has invested more than 265 million euros (approx. 76 billion HUF) into modernizing and expanding the airport infrastructure, thereby fulfilling its commitment towards the Hungarian state undertaken in the privatization.
Budapest Airport reiterates that the bankruptcy of the Hungarian national carrier Malév on 3 February 2012 pushed the entire Hungarian aviation sector into a protracted and deep crisis. Several thousand jobs were lost at the airport, with many more set to follow in the Hungarian hotel and tourism industry if nothing is done to manage the crisis. The disproportionately high land tax only served to exacerbate the position of the airport, which further damages the competitiveness of the Hungarian economy and of Budapest in the region.
Budapest Airport considers it a peculiar concurrence that one of the main beneficiaries of the land tax modification is Budapest District XVII, which, according to a survey analyzing the financial management of municipalities, amassed record levels of debt running into billions of forints last year. Of the 46 largest Hungarian municipalities examined by the Hungarian Progressive Institute, Budapest District XVII finished as the third most rapidly indebted local government in Hungary, having become indebted at a rate of 230% in the space of a single year. Its figure for indebtedness per capita increased by 209%, which is the fourth worst number amongst the municipalities examined. It was then in March this year the mayor of District XVII who proposed the modification disproportionate against Budapest Airport to Parliament in the first place, while Hungarian aviation and tourism were suffering from the Malév collapse.
“In order to manage the post-Malév crisis, Budapest Airport submitted a package of more than ten proposed measures to the ministry, which included significantly reducing the land tax burden of the airport. The answer to the proposal was rejection on the one hand and a further increase in land tax on the other, so the airport operator has been forced to take legal steps as well,” said Jost Lammers, the CEO of Budapest Airport, about the submission of the petition to the Constitutional Court. “As the largest taxpayer and employer for the settlement, we are hopeful that discussions with the municipality of our home district of Budapest District XVIII, aimed at formulating a fair local tax policy catering for the interests of regional economic stakeholders as well, will be successful.”