The National Assembly of Hungary passed a bill on Tuesday limiting the jurisdiction of the Constitutional Court [official websites, in Hungarian] on state budget and taxation matters. The law, which passed 261-103, eliminates the court's ability to examine the recent "crisis taxes" imposed on banks, energy companies, foreign retail and telecommunication firms. Once the law is signed by President Pal Schmitt [EP profile], the court will only be able to invalidate tax and budget legislation if it infringes on basic human rights like the right to privacy and the freedom of thought, conscience and religion. Critics argue that the legislation threatens democratic freedoms. The Hungarian Civic Party (FIDESZ) [party website, in Hungarian] controlled legislature decided to restrict the power of the court after it issued a decision last month striking down a 98 percent retroactive tax [press release, in Hungarian] on public severance payments.
Hungary faces a growing budget deficit and is on the verge of a severe economic crisis. The National Assembly is currently debating the 2011 budget and adopted the series of unconventional taxes and budget policies in order to conform to the EU's Excessive Deficit Procedure for Hungary [materials]. The Fiscal Council of Hungary [official website, in Hungarian] forecasts that the "crisis taxes" [No. T/1374] are expected the increase budget revenues [report, in Hungarian] and satisfy the Pay-As-You Go rule. Without the "crisis taxes" Hungary would not be able to meet next year's budget deficit target of less than 3 percent GDP. In 2007, the Constitutional Court ruled in favor [JURIST report] of a proposed referendum on unpopular economic reform proposals advanced by former prime minister Ferenc Gyurcsany [BBC profile]. The high court ruling reversed a prior ruling by the National Election Committee [official website], which barred the referendum on the grounds that it would have affected the budget in violation of Article 28C-5a of the Hungarian Constitution [text].