Posted originally on Apr 23, 2025 by Martin Armstrong 

Hungary’s Viktor Orban is fighting declining birth rates with a “population first” agenda that will make parenthood more affordable. “We are building the world’s first family-centered economy,” Orban proclaimed. One of the first steps will be eliminating taxes for mothers.

Mothers with one child will be exempt from paying income tax until they turn 30, while women with two or more children will be exempt from the tax indefinitely. Around 600,000 mothers will currently benefit from the one-child exemption, with another 250,000 expected to benefit from the two or more exemption criteria.

“This is not just a reform; it’s the dawn of a new era for Hungary’s economy,” the prime minister stated.

Hungary reported its lowest birth rate since 1949 last year, with only 77,500 births or a 9.1% YoY decline, according to the Hungarian Central Statistical Office. Anyafalva Maternity Application conducted a study to ask potential parents why they planned to have no or fewer children. Around 52.9% stated that economic struggles were preventing them from having or expanding their family, and 43.8% noted work-related issues. Childcare and inflation, food inflation in particular, were also cited as causes.

Yet, Hungary’s population has been on the decline since the 1980s. At the current rate, the nation will be short 1 million citizens by 2050. The fertility rate remains around 1.34-1.59 children per woman. Another issue is that 7% of Hungarians, or 700,000 people, live abroad. This is especially prevalent with young professionals and skilled laborers, fueling the decline of the economy. Hungary’s private sector is currently short 60,000 workers, with shortages prevalent in health, education, and IT. Hungary’s per capita income is low amongst EU member nations, with 20% of the population at risk of poverty.

Orban has plans to attract Hungarians back home. Housing loan interest rates will now be capped at 5%. There are discussions of capping food prices as well, providing loans to expecting parents, housing subsidies, and even monthly cash payouts.

Eliminating taxes on mothers should be a no-brainer, but Orban is teetering on socialism by attempting to provide government subsidies to the population. Price controls DO NOT WORK. The government should not be permitted to invade the private sector.

Let’s take a look at Venezuela. Hugo Chávez implemented price controls to combat inflation, but it backfired and caused the nation to experience one of the highest rates of inflation in the world. The government arbitrarily set prices without taking note of demand, supply, or the cost taken on by the private sector. Business was no longer profitable, and small mom-and-pop stores disappeared. Those that remained could barely operate and experienced severe shortages of basic goods like food. The people panicked and began to hoard what they could, as they did not know when the goods would be available again. The same disaster occurred in the Soviet Union under Gosplan. Whether it is communism or socialism, any method that decimates the free market ends in an economic collapse.

Hungary also has a massive pension problem and an aging population. The government allocated between HUF 7,200 billion and HUF 7,700 billion in 2025, an increase of 655 billion from 2024. This year, Hungary’s overall budget deficit is expected to reach 4% of GDP. Then add the fact that they are an EU member nation, and despite Orban’s protests, they are forced by Brussels to continue aiding Ukraine indefinitely. Then you have Ukraine infringing on Hungary’s agriculture and energy sectors. Simply put, the government does not have the resources to hand out big payouts or expand its social programs.

“This will be a huge expense, but the reviving economy, the measures to support businesses, and full employment combined are capable of paying for this in a way that the budget deficit and public debt both decline,” he said. Government spending must be reformed before anything can be assessed. Inflation will persist, and capping prices ensures absolute failure. I have never agreed with the income tax in general, so the aspect of eliminating that burden for mothers is perhaps the only solid part of the plan.