The principles of pricing election promises:

 

  1. We are selecting election promises from official documents of parties that currently have representatives in the Hungarian Parliament (but not necessarily have faction). Namely: Fidesz, KDNP, MSZP, Jobbik, Együtt-PM, LMP and DK. We do not rule out the possibility of pricing an other party’s program, provided that we are asked to do so.

 

  1. We arrange the promises into categories in terms of concreteness and how easily can its value be measured.

    1. The promise gives obvious directions in terms of parameters. (e.g. “We plan to abolish nursery care fees.”)

    2. The promise is incomplete but can be supplemented. (e.g. “We will eliminate the Media Council”)

    3. Critical parameters are missing which can not be deduced. (e.g. “We plan to encourage young farmers, thus we encourage a generation change in agriculture.”) Pricing a promise like this, only an estimate of the magnitude can be calculated.

    4. Theoretical, general or legal promise cannot be valued. (e.g. “We promise to operate the EU tendering system more effectively and operate the transactions transparently.”)

 

  1. Unless the promise’s text does not state otherwise, we will assume that the promise is meant to be taking effect from the 1st of January 2015.

 

  1. The budgetary effects are calculated relative to the fixed regulatory framework assumed in the Fiscal Responsibilty Institute Budapest’s baseline model. This baseline model will be disclosed to the public from the first week of February, 2014. (e.g. “We guarantee the durability of pensions” has no budgetary impact, since the current law requires just that: inflation indexation.)

 

  1. If a promise is only speaking in terms of something’s (e.g. wage, subsidies) increation or reduction, it is assumed that the rate of change is uniformly 20%.  

 

  1. In case a promise gives no detailed specifics, we supplement it with additional logical assumptions. For example, “VAT cuts for basic food items”. As of now, these items belong to the 18% rate category, together with accomodation services. Since the EU regulations don’t allow additional VAT rates to be introduced, there are two ways of interpreting this promise. One is transferring the basic food items to the lower, 5% VAT. Second is lowering the 18% rate. Our assumption here is that the latter would take effect since that causes significantly less deterioration of fiscal balances. Acting in accordance with Principle No.5., we assume that the 18% would be reduced by 20% - meaning a 3 percentage point reduction -  dropping down to 15%.

 

  1. The net effect is calculated for the government sector as a whole, including municipalities and a portion of state-owned enterprises as well.

  2. In case of promises that have several billion HUF worth of impact, we plan to measure the second-round macroeconomic effects as well. (e.g. the reduction of VAT on basic food reduces the rate of inflation, resulting in a much lower inflation indexation for pensions than were assumed in the baseline beforehand.) We plan to calculate second-round macroeconomic impacts of each and every party’s programs taken as a whole.  

  3. Unless that is cleary put in the program how a party is planning to use EU funds in order to finance some of their promises, EU funds are not considered to reduce expenditures.  

  4. Transparency is sorting the election promises into the next four categories depending on their relevancy to the improvement of transparency in institutions and to the reduction of corruption risk:

    1. Color red means that the promise improves corruption risk, and it it contrary to the recommendations of TI.

    2. Color blue means that it reduces the risk of corruption and is mentioned among TI’s recommendations.

    3. Color green means that it reduces the risk of corruption and is not covered by TI’s recommendations.

    4. Color grey means that the promise is irrelevant in regard to corruption.

  5. In case the timing of the programs’ appearance makes it possible and in order to avoid misinterpretations on both sides, the completed analysis and pricing will be sent to the parties for further discussion before their public disclosure.

 

Videos