Hungarian parliament curbs court, gets unfettered budget powers

Nov 16, 2010, 14:52 GMT

Budapest - Prime Minister Viktor Orban's centre-right alliance on Tuesday stripped Hungary's Constitutional Court of the power to review legislation on key issues of economic policy.

The constitutional amendment approved by parliament was a response to the court's rejection on October 26 of a government bill calling for a retroactive punitive tax on severance packages at state-funded institutions.

The parliamentary vote means the Constitutional Court can no longer review legislation in areas that are already barred from national referendums.

The government can now push through more significant economic policy measures, such as allowing the voluntary transfer of private pension funds to the state sector, without risking a court review.

In addition to temporarily withholding the transfer of compulsory payments into private pension funds, equivalent to about 147 million dollars a month, Orban's cabinet is betting on a mass return to the state system.

These moves, along with windfall taxes on banks and certain business sectors, are essential parts of a plan to bring the budget deficit below 3 per cent in 2011.

Orban's governing Fidesz-Christian Democrat alliance controls over two-thirds of the seats in Hungary's parliament, giving it the power to make deep structural changes without cross-party consensus.

The announcement in October of plans to clip the court's wings sparked protests by opposition parties and civil organizations.

Fidesz is currently working on a complete re-write of Hungary's constitution, due for completion in the spring.

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