Election 2022

Hoteliers unhappy that people can now spend their money elsewhere

As part of the election-year giveaway, Orbán personally announced yet another gift to the people: that they can spend their non-cash vouchers on more than just domestic hotels and restaurants. They can even buy food!

Naturally, the announcement came directly from Orbán, without any prior consultation with anyone, and with no draft law to pore over for the details. The decree will come later, probably overnight on a Saturday night.

To understand why it’s such a big gift and why hoteliers and restaurant owners are so aghast that they even dared to express disapproval, one must understand just how stifled Hungarian employees normally are.

Some years ago a tax-free perk has been introduced to Hungarian employees. They could get some of their salaries (that they worked for) in non-cash vouchers. It was not really a perk because it comes off from their original salaries, but it was only visible for those who were there when the system began. They were mesmerized by the tax exemption of the vouchers. Those who came later simply grew into this regime and can’t imagine any other way.

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The original look of the vouchers – now they have fancy plastic cards and a new name. And the rules keep changing. Image: index.hu

The vouchers weren’t taxed as cash but they were also limited in use. A byzantine system of warm and cold food, entertainment and holiday vouchers has been introduced and people grew used to it. As the complexity of the scam rose and the transparency of the scheme decreased, people developed a kind of dependence bonding with the vouchers. They learned to love it alongside their annual declarations of how much of each kind of vouchers they requested from HR. Again, it was their own salaries they received in limited-use paper slips. (Pensioners also receive them before elections, issued by the government, with Orbán’s letter and his photo next to them.)

I call it a scam because it didn’t just work to delimit the employees. It also worked to whip the businesses that were allowed to accept vouchers: some got 100% of the voucher’s face value from the state when they redeemed it for actual money – some got less. Guess who got the full value (and then some)?

As the desperately poor price sensitive population started getting their booklets of vouchers instead of generally accepted (not to mention convertible) cash, a new national pastime was born: they popped their heads into stores, asked if they accepted vouchers, and left if the answer was no. Businesses were forced to introduce yet another level of accounting, complexity and delayed revenues, even if the government chose only to partially compensate them for the vouchers’ face value. Foreign companies were typically punished in this way, too.

Hoteliers benefited perhaps the most. Some of you might feel a warm and fuzzy feeling at the thought of limiting (the other) peasants from vacationing abroad (or to save that money for a down payment on a house). But that is really not such a good idea – for the peasants. Because the mushrooming (thanks to dumb EU cash) local hotel and spa industry welcomed the captive clientele with delight. Not only could these people not save their money instead of a holiday, not only could they not holiday elsewhere, they could also not get a bargain from the domestic hotels – that grew more and more expensive every year.

Articles of crappy domestic hotels in the middle of nowhere costing more than a Paris or Hong Kong hotel the same night regularly pop up – and surprise no one. “Wellness hotels” have been built next to landfills and pig farms thanks to dumbass EU bureaucrats using tourism as the genius idea that would surely prop up every ailing local economy in every tiny village, ever. It only ever sounds good to a central planning comrades and we had enough of those under Russian rule before 1989. And these decrepit wellness trash heaps with Jacuzzis now enjoy an undeserved interest from trapped consumers – at whatever price they ask for, because the vouchers also expire fast.

Many of these hotels are in the hands of local cronies, while national cronies snap up the biggest ones. They get the money to buy from nationalized or cronified banks, or through the central bank rushing to buy up their junk bonds even before release, causing alarm that the banking system is at systemic risk due to these bad loans. Then they get the cash from dumbass Brussels to renovate, maintain and run their hotels. Ten years later they get yet another non-refundable subsidy to renovate again. Their customers (if they accept any, because some of them are castles in personal use) are trapped and can’t get a good deal for lack of competition and the voucher system. Needless to say that this business model doesn’t breed business excellence or even the faintest idea how to run a hotel. The whole thing is a disgrace and a new generation of people grow up thinking they are businessmen – but are no better than the communist cronies of yesteryear. Just more arrogant.

This gravy train is threatened when Orbán unilaterally announces that the dumb vouchers can now be used to buy food (strictly until the elections). It may be popular with employees – but it’s a sad thing that they have to be grateful for being able to use their own money for a few more things. It is unpopular with cronies (and the few honest businesses trying to compete with the taxpayer-funded crony businesses) but Orbán just sent them the message to suck it up. If they won’t win in 2022, the gravy train is over, so they have to contribute to the election victory – just as the government empties the budget to finance more populist election handouts.

The same contribution has been asked from cronies who got energy companies under Orbán’s cronyism: that they don’t increase prices and swallow losses under the price control system until the elections.

The question is whether these cronies believe that the elections can be won by Orbán and the gravy train continues (and possibly increases) after that – or they prefer not to contribute anything from their ill-gotten loot to the election efforts, saving for the aftermath.

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