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Gov’t Hopes to Net 800 Billion Ft. from Special Windfall Taxes

The lengthy war and energy crisis threaten another global economic crisis, and the sanctions policy in Brussels is also responsible for the steep rise in prices, said Minister Gergely Gulyás in Thursday afternoon’s Government Information briefing about the special tax announced on Wednesday by the Orbán government.

Gulyás emphasized that the war in Ukraine does not yet pose a direct threat to Hungary, but that there are the dangers of a humanitarian catastrophe and possible serious damage to the economy.

Accordingly, the government decided that those who make extra profits in the current situation will be expected to contribute to government priorties. Special windfall taxes will be levied in the sectors named on Wednesday, which will be used to finance defense spending and protect utility prices.

The government won’t be taking anyone’s entire profit, but a significant part of it, said Gulyás, who said that the measures also guarantee that the budget deficit target of 4.9% for this year will be met.

Next year’s budget plan is also being submitted now, with the government expecting an inflation rate of 5.2%, a deficit target of 3.5%, and economic growth of 4.1% next year.

Gulyás claimed that there had been serious abuses of the government’s price cap policy on fuel, so from Friday only vehicles with Hungarian registration and licence plates will be able to fill up with cheaper gasoline, which will reduce the amount of gas tourism from other countries.

Cutting spending will provide the government with 60% of the amount needed to meet its budget target this year and next, with the new special taxes to make up the remaining 40%.

Special windfall taxes will be levied on top of current sector-specific taxes in a total of eight sectors: banking, insurance, energy, retail, telecommunications, airlines, large pharmaceuticals, and a reintroduction of the advertising tax in January 2023.

The government hopes to collect 800 billion Ft. (US $2.19 billion) from these new taxes. [444]

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