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Hungary's Orban orders tax lawsuit dropped, mayor says it's an attack on rule of law
Published by Global Banking and Finance Review
Posted on February 4, 2026
2 min readLast updated: February 4, 2026
Home > Finance > Hungary's Orban orders tax lawsuit dropped, mayor says it's an attack on rule of law
Quick Summary
Hungary's PM Orban orders the end of a tax lawsuit, sparking a rule of law debate. Budapest's mayor criticizes the move ahead of April elections.
Hungary's Orban orders tax lawsuit dropped, mayor says it's an attack on rule...
Hungary's Legal and Financial Dispute
BUDAPEST, Feb 4 (Reuters) - Hungary’s Prime Minister Viktor Orban has ordered the termination of a lawsuit brought by Budapest over a disputed "solidarity tax," a step the city’s mayor denounced as a direct assault on judicial independence ahead of an April election.
Background on the Solidarity Tax
The Budapest Municipal Court declined to comment on the specific case, but said in an email: "In general, in pending case(s) it is up to the relevant judge to take the step(s), who would assess the cases in line with his/her oath taken as a judge."
Reactions from Budapest's Mayor
Budapest, run by liberal mayor Gergely Karacsony, has been locked in a financial dispute with Orban's government over a "solidarity tax" payable to the state. The dispute contributed to a Moody's downgrade of the city's credit rating.
Government's Justification for Termination
Orban, in power since 2010, faces a tough reelection bid in parliamentary elections set for April 12.
The European Union has suspended billions of euros worth of funding over Orban's controversial rule-of-law reforms, hitting Hungary's economy.
Invoking special emergency powers, Orban said in a decree on Tuesday the pending lawsuit over the tax for 2023–2025 would be "terminated by the court." He said the tax must be collected.
'DIRECTLY ATTACKED THE RULE OF LAW'
Karacsony said the move was intended to prevent the city from "fighting in the courts against the extremely unjust and unlawful solidarity contribution."
"No longer even caring about pretences, the government has directly attacked the rule of law," he said in a Facebook post.
A government spokesman did not respond to Reuters' queries.
Kristof Andras Kadar, co-chair of legal advocacy group, the Hungarian Helsinki Committee, said the decree violated a core legal principle.
"This is the separation of the branches of power, as the executive branch – which is one of the parties to the lawsuit – suddenly says the court must end the case," he said.
(Reporting by Krisztina Than and Anita Komuves; Editing by Bernadette Baum)
Key Takeaways
- •Hungary's PM Orban orders termination of a tax lawsuit.
- •Budapest's mayor calls it an attack on judicial independence.
- •The dispute involves a controversial 'solidarity tax'.
- •EU funding to Hungary is suspended over rule-of-law concerns.
- •The move comes ahead of Hungary's April elections.
Frequently Asked Questions about Hungary's Orban orders tax lawsuit dropped, mayor says it's an attack on rule of law
1What is a credit rating?
A credit rating is an assessment of the creditworthiness of a borrower, indicating the likelihood of default on debt obligations.
