A 'Greek tax' may be manufactured in Brussels?

HUNGARY - In Brief 04 May 2016 by Istvan Racz

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Today's local press in Budapest is quoting Financial Times that the EU Commission is about to announce a plan to force those member states that refuse to take in refugees allocated to them through a mandatory quota system to pay a penalty of €0.25 million per refugee. Most probably, this would not be called a penalty but a contribution to the cost of keeping refugees, mainly with the aim to relieve Greece's situation, where over 50 thousand refugees are reportedly stranded currently. This plan would be announced possibly in the next 24 hours as part of the EU's attempt to 'save the Schengen Treaty'. Should this be the actual proposal, its approval would be markedly further away, as compulsory quotas are heavily opposed by a number of member states, mainly in the CEE. But the more powerful members of the EU are clearly in the other camp, and so there would be a high probability of the defiant CEE members, including Hungary first of all, being forced to pay in the end. And this would be a material fiscal burden of course. According to the only existing decision of EU Council on compulsory refugee quotas, the one approved in September 2015, Hungary is required to take in 1.96% of all refugees included in the plan, i.e. 2352 people. Using the number published by the FT, the cost of refusing all refugees in this quota would reach HUF183bn or 0.5% of GDP. The quota is set for two years, which would reduce the cost to half of the foregoing number, but the tricky part of the Council's decision was that the number of refugees involved may be raised at any time if needed. And the latter would be certainly beyond Hungary's (or CEE country's) control. The potential consequences wo...