Proposals to Change the State Budget

These two organizations have been proposing changes to the annual state budget since 1992. Our ideas have drawn widespread attention and brought on a number of new measures (e.g. the introduction of environmental taxes, and the cancellation of the very costly and environmentally damaging Expo '96 in Budapest).

Our package is designed to:

Reduce labour costs by decreasing social security and personal income taxes (so that human labour will become more economical than energy and raw material intensive activities).

Make up for the fiscal shortfall by increasing existing taxes, and introduce new ones on products and processes that seriously harm the environment (e.g. raise motor fuel prices to the Austrian level, and impose fees on air pollution from power plants).

Halt all direct and indirect subsidies to environmentally damaging activities (e.g. each year international heavy truck traffic causes uncompensated damages of about 100 billion HUF, and the environmentally harmful air transport industry receives a direct subsidy of about 5 billion HUF).

Redirect more money to education, culture, health care, environmental protection and research.

Take concrete measures to restrict the black and grey economy (e.g. impose liability for activities which might damage the environment, so companies cannot „go bankrupt" and leave behind pollution to be cleaned up with taxpayers' money).

The Proposals to the 1997 State Budget are also available in English.

French Company (Auchan) Above Hungarian Law?

After the first court decision, a company spokesperson has declared that Auchan will continue constructing the project and then seek permission to keep running the mall. The company expects that the magnitude of its investment in Budaörs, a small town near Budapest, will force the authorities to grant permission to operate the mall even if its construction was illegal. After the superior court decision, Jean-Paul Filliat, director of Auchan in Hungary, said he could see no reason to halt the construction (!).

The company was sued by representatives of local residents and the Clean Air Action Group, a national citizens’ environmental organization, on the grounds that the traffic generated by the mall would be detrimental to the health of area residents. András Lukács, national secretary of the Clean Air Action Group, stressed that his organization together with the local citizens will use all legal means to stop the construction. The group is calling upon consumers in other countries to boycott Auchan for its blatant refuse to comply with court orders based on environmental considerations.

The case, which has drawn extensive attention in the Hungarian press, will serve as a test of whether an international company has the weight to override the courts of a nation in economic transition.

Why Fuel Prices Should Be Harmonized?

The region's lower fuel prices cause serious problems in EU countries, too; smuggling and usage of cheap fuels are not only illegal and untaxed, they also worsen traffic and its accompanying environmental ills.

The solution could be the harmonizing of fuel prices all over Europe. The public and their governments must be alerted to this issue and urged to take steps necessary towards adjusting Central and Eastern European fuel prices to prices in neighbouring EU countries (Austria, Germany, Italy). The EU should give no aid to countries whose governments support (even indirectly) smuggling and the resulting aggravated pollution. EU and non-EU countries alike could raise their prices to a common standard simply by increasing excise duties on fuel.

Even before countries harmonize their fuel prices, we propose that they reign in smuggling by limiting car drivers to 10 liters of tax-free imported fuel per crossing, and lorry and bus drivers to 20 liters. EU countries, particularly Germany and Austria, will likely welcome this assistance in controlling law-breaking and environmental harm. Some other good reasons for harmonizing fuel prices:

stimulation of energy conservation (lower total use of motor fuels, thriftier—that is, slower and safer—driving habits, car manufacturers eager to design in energy savings).

reduced auto use (and hence reduced congestion, accidents, vehicle noise, exhaust).

boosts for rail transport and inland waterways (if they can use their capacities more efficiently, they can invest the revenue in improvements).

lower taxes on human labour, potentially higher employment (that is higher taxes on fuels can help cut salary taxes, and encourage employers to hire).

Clearly, an international approach, and EU involvement, is essential to combatting the serious problem of "fuel tourism".

Transit Lorry Traffic in Hungary

In crossing Hungary, these foreign vehicles cause enormous environmental harm, worsen the nation's traffic jams, damage roads and buildings, and cause a great number of serious accidents. The problem is aggravated by the fact that many of the transit routes cut through towns and cities, with direct effects on the health of local citizens.

We must achieve the following goals:

reduce transit lorry traffic;

convince haulage companies to use more environmentally friendly transport modes like railways, combined transport and inland waterways;

make lorries that keep using roads pay the costs of their damage.

Up to 1992 this traffic went untaxed, or nearly so. At the end of 1991, however, energetic lobbying by environmentalist NGOs led the Hungarian Parliament to raise the transit charge tenfold, to HUF 3 (about 3 cents) per ton-kilometer, roughly the same as Austria, although without many of the Austrian restrictions such as the ban on night-time and weekend passage. Even so, the measure was challanged by truck drivers and haulage companies from EC countries, especially Greece.

A delegation from the European Community came to Budapest to negotiate with the Hungarian government on transit fees. The Clean Air Action Group — one of the leading environmentalist NGOs in Hungary — met the delegation and explained that raising the transit charge was in full accordance with the associate membership agreement between Hungary and the EC, which was scheduled for approval within the next few months.

The agreement emphasizes the commitment from both sides to observe human rights, and the Action Group argued that the damage caused to the health of thousands of Hungarians by transit traffic was a gross violation of human rights, and that raising the transit charge would both help reduce traffic and provide financing for combatting its harmful effects.

Whereas the total income from transit charges in 1996 only amounted to HUF 1.5 billion, the damage from transit traffic that year alone is estimated to have equalled at least HUF 90 billion. Even with the higher charges, transit traffic would be paying only a fraction of its real costs — so in effect the people of Hungary have been subsidizing foreign trucks' trips through their land. One of the associate membership agreement's main aims is to help Hungary move toward a market economy; and raising transit charges was an important part of this process.

Rail freight transport must be further encouraged according to th EU, too. An increased transit charge will help reduce road freight subsidies and make rail shipments more competitive.

But because of tremendous pressure from the EC delegation, the Hungarian government severely compromised its program. In theory, the state still imposes transit charges, but has issued so many free passes that more than 80% of the trucks passing through Hungary (and an even larger percentage of trucks from EU countries) now pay nothing at all.

The problem is that Hungary is currently seeking membership in the European Union, and the government does not want to spoil the country's chances by taking measures that affect road freight transit. The Clean Air Action Group and the Hungarian Traffic Club will continue to fight for controls on damages arising from transit traffic, and to make haulers pay the full cost of their activities. These two NGOs are also lobbying for fuller development of Hungary's rail capacities.

Proposed Modifications to Motorway Policies

Hungary is now spending far too much money on new roads and not enough on road maintenance and safety. Moreover, some of the new roads cannot be justified by high enough rates of return, nor have their developers performed environmental impact assessments that meet EU standards.

The Clean Air Action Group and Hungarian Traffic Club propose that:

Each Trans-European Network link should be judged on its own merits, rather than simply assumed to be an essential piece of the proposed network. Most such links could be more readily be developed by improving existing roads and rail lines. The EU needs sustainable mobility, not just ill-considered stretches of fresh asphalt.

All project developers, as a condition for loan eligibility, will have to perform environmental impact assessments per EU standards, and determine whether projects violate EU directives.

The Hungarian government should change its transport policy. The ongoing accelerated road construction will require further loans, thereby increasing Hungary's indebtedness with no guarantee of economic improvement along the way. New highway loan decisions should be based on economic, financial and environmental appraisals for the entire corridors in question, not just the segment needing immediate funding.

Maintenance of existing roads must take priority over new construction.

New roads should be only allowed if their toll revenue can cover the direct and indirect costs.

Transport policy must give priority to more environment-friendly modes of transportation. Planned motorways would run parallel to the main railway lines, reducing their usage further. Yet rail shipping is viable throughout Hungary and Eastern Europe, albeit in need of substantial renovations, while the region's road network is underdeveloped and unlikely to improve much in the foreseeable future. Revamped rail shipping also has the advantage of support from Austria and Germany.

The social costs of highway construction must be better scrutinized. Many countries have already experienced unfortunate side-effects of new roads between developed and under-developed parts of the country. Resources get drained from the less developed regions, because their products and services cannot compete with those flowing in from more developed areas. In Hungary, the existing economic gap between western and eastern counties would widen when highway links are complete, despite EU regional development policies to the contrary.

There are alternative ways to link regions, many of them requiring no additional transport modes. Transit alternatives exist for Hungary's TEN corridors, along with alternative methods of economic development that even circumvent the principles on which the TEN concepts are based.

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