Under the communist system, local tax issues in Hungary were decided at the national level without any participation by citizens. Following the transition to democracy, tax authority devolved to the local level, but citizen involvement remained minimal. Now, under Partners-Hungary’s cooperative planning project, Hungarian citizens are directly participating in local tax reform efforts for the first time.

Partners-Hungary identified Nagykanizsa as a town in which an ongoing public conflict was creating larger community problems. Through meetings with the mayor, the city’s tax department director and finance committee director, non-governmental organization (NGO) representatives, local businessmen, and citizens, Partners-Hungary built consensus that local taxation should be a target issue for a cooperative planning project. Taxes in Nagykanizsa had been an ongoing source of conflict, and these stakeholders believed that involving citizens in the taxation process would increase satisfaction with the city’s tax structure. Some local business leaders were skeptical that a low-profile dialogue would produce any real change, but the inclusion of city officials persuaded them that the process could be effective.

Participants across sectors agreed to collaborate to design a new local taxation system that would be acceptable to all parties. In a series of trainings, the group was taught methods for effectively expressing one’s own interests while still including all parties’ interests in the decision-making process. These trainings were followed by a planning session, in which participants used their new skills to examine the present taxation system and its weaknesses, and to discuss how an ideal system would be built.

As a result of Partners-Hungary’s intervention, diverse community stakeholders agreed to change the entire structure of the local tax system, levying one tax instead of the previous four. A regional council was established to promote continued dialogue about local tax rates, and a dispute resolution process was set up to deal with any future conflicts. In addition, participants agreed to work together in the future to alleviate the tension among their sectors, especially regarding taxation issues.