Distribution of the local business tax revenue in Hungary

Released: 24 April 2026

Present experimental statistic is focusing on the regional and sectoral distribution of the local business tax (HIPA) revenue based on data in settlement and Budapest districts breakdown. According to this experimental statistic the 2023 average of HIPA revenue in Hungary was 131 thousand HUF per person. The territorial distribution of the local business tax revenue is heavily concentrated with a strong preponderance in the capital city. The total business tax revenue of the capital (498 billion HUF) is outstanding, representing 40% of the national HIPA revenue in 2023. Out of the total paying in 55% originated from a single district of the capital, the District V. Considering the capital as a whole the HIPA per capita was 297 thousand HUF, while in 22 of the districts it ranged between 112 thousand and 163 thousand HUF, the District V reaching the outstanding value of 11 million 659 thousand HUF. The local business tax revenue is also concentrated on sectoral level. A significant part of the HIPA revenue is coming from certain sectors, manufacturing, trade and construction providing collectively close to 50% of the total HIPA revenue. Within it the concentration of enterprises with national coverage was significant in several sectors.

Timely changes in local business tax revenue

The local business tax revenue continuously grew between 2014 and 2019, then, due to the Covid generated economic setback, fell in 2020. One of the Hungarian government’s measures for aiding economic actors during the pandemic was the introduction of the transitory HIPA allowance for small and medium size businesses. For two years starting from 2021 their HIPA rate was maximum 1%, but in 2022 an economic restart and price increases was also detectable at local business tax revenues. The relatively significant growth of 2023 was due, beside the re-establishment of the 2% local business tax rate limit, high inflation, to the introduction of this tax type in more settlements, where it had not previously been in effect.

As the HIPA has to be used for supporting settlements’ local communities the state of different settlements may be compared on the basis of HIPA revenue per capita. On average 131 thousand HUF HIPA revenue came by person in Hungary in 2023, surpassing nominally the 2022 value by 42%, on real value by 20%.

Distribution of the local business tax revenue by settlement types

Local business tax revenue has its role in settlement development, in supporting public services and in improving local communities’ quality of life. It is a basic interest of local governments to attract ever more enterprises, as these generate significant tax revenue, alongside other results. This tax form, at the same time, may generate a certain race between settlements: a more favourable tax rate may be an incentive for investors, while on the long run, the low tax revenue could jeopardise the financial stability of the settlement.

The local business tax revenue per capita shows a significant territorial disparity. It is substantially higher in the capital (297 thousand HUF) than in any other settlement type, beside it also surpasses the national average in towns of county rank, while the rest of towns and municipalities remain below the national average.

There are notable differences between settlement categories, too. Among towns of county rank Székesfehérvár, with its highest HIPA revenue per capita reached six times higher value than Érd, with the lowest value of 2023, and more than four times higher than Salgótarján, the county seat with the lowest HIPA revenue per capita value. Székesfehérvár, at the same time, surpassed in 2023 the capital in regard to HIPA revenue per capita.

Distribution of the local business tax revenue by settlements

Generally, settlements with larger area, with more population, more enterprises reach higher nominal sum HIPA. The 2023 HIPA revenue of Budapest (498 million HUF) is significant from this point of view, it was 17-fold higher than that of Székesfehérvár, the town on the second place, and it is about 1250 times higher than the national average of HIPA per settlement. On the other hand, Budapest has an outstanding population eligible for support, so the HIPA revenue per capita is a more relevant basis for comparison.

The average HIPA per capita of towns and municipalities is lower than that of the capital and towns of county rank, at the same time only smaller towns and municipalities are among the settlements with the highest HIPA revenue per capita. Székesfehérvár, with its highest HIPA revenue per capita among large cities (311 thousand HUF/person) is only the 58th in the settlement ranking.

Distribution of the local business tax revenue by districts

Territorial differences are significant on district level, too, at the same time considering HIPA revenue per capita the outstanding values of certain settlements fade away. In the neighbourhood of the 3 settlements with eminent values in the Szigetvár district (Gyöngyösmellék, Várad, Kétújfalu) or Berente in the Kazincbarcika district there are municipalities with population in extreme poverty, as such the district average of the business tax per capita is not outstanding anymore, even if it is still among the higher ones. Altogether, districts which include towns with the highest HIPA revenue per capita still have a high-level HIPA revenue per capita.

Local business tax revenue in the capital

The total local business tax revenue in the capital (498 billion HUF) is outstanding, representing in 2023 40% of the total HIPA revenue of the country. Out of the total paying in 55% originated from a single district of the capital, the District V, this value is almost 17 times higher than that of the second place holding District XI. Businesses of Districts I and XXIII gave the smallest HIPA payments. The District V as such realised 22% of the country’s HIPA payments, in contrast, only 0.25% of Hungary’s population was living here, in consequence the District V is also standing out from local business tax per capita point of view.

Considering the capital as a whole the HIPA per capita was 297 thousand HUF in 2023, while in 22 of the districts it ranged between 112 thousand and 163 thousand HUF, the District V reaching the outstanding value of 11 million 659 thousand HUF, owing to this fact, overall, the average value per capita in Budapest is high.

Territorial concentration of the local business tax revenue

The local business tax revenue shows a significant territorial concentration. HIPA revenue is distributed unequally between the country’s settlements, as shown by the Lorenz curve¹ based on the HIPA revenue values of settlements and the extremely high Gini index². The value of the Gini index (0.94 in 2023) did not change in merit during the last decade.

On the HIPA revenue representation on a topological (distorted) map the colouring of territorial units is consistent with the displayable index, its size, however, is proportional with the HIPA revenue. The strong dominance of Budapest is outlined, based on the topological maps, in both county and district breakdown, among the territorial units with strong territorial concentration.

On the topological maps showing district level HIPA revenue data is discernible – along with the dominance of Budapest – the areas of districts including large towns enlarged proportionally with the local business tax revenue. Even if, overall, there is a significant HIPA revenue in large towns, in many cases its value per inhabitant does not even reach the average.

Change in the dominance of settlements with higher HIPA revenue may be demonstrated by applying the Herfindahl-Hirschman index (HHI). Based on it, the territorial concentration of the local business tax revenue somewhat increased in the past decade. The proportion of Budapest varied between 37.7% and 40.9% considering the total HIPA revenue of the country, the change in the capital’s share had by itself a significant impact on the HHI index variation.

The territorial concentration of HIPA revenue is also present within the capital, mainly due to the excessively high tax payments of the District V. Except for the outstanding values of the District V, the distribution of the HIPA revenue in Budapest is more balanced.

The share of the District V in the local business tax payments in the capital slightly grew during the past decade. 55% of the total HIPA revenue of Budapest came from here in 2023.

Sectoral distribution of local business tax revenue

The local business tax revenue is also concentrated at the sectoral level. Present estimate, based on available data highlights the share of enterprises within sectors in the 2023 total local business tax revenue. The majority of HIPA revenue is coming down to certain sectors, manufacturing, trade and construction realising jointly almost 50% of the total HIPA revenue. Within it the concentration of enterprises with national coverage was significant in several sectors.

Based on estimations, enterprises belonging to vehicle production and food industry realised 30% of the estimated HIPA revenue within manufacturing.

Appendix

Footnotes

1. The Lorenz curve is a quadrat shaped figure produced in a rectangular coordinate system, where the horizontal axis shows the cumulative relative frequencies, the vertical axis the cumulative relative sum of values. The diagonal represents the equal distribution, the total lack of concentration. The farther down the Lorenz curve is from the diagonal, the more concentrated the issue under observation is in relative terms. ↩

2. The Gini index (concentration coefficient) is measuring the revenue (or asset) inequality within a given territory (usually a country). Its value falls between 0 and 1, 0 stands for equal distribution, 1 for the complete concentration. Its exact value may be quantified based on the Lorenz curve, it is the ratio of the area between the Lorenz curve and the equal distribution representing diagonal (45^O) compared to the area of the triangle below the diagonal. ↩