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Hungarian govt to impose 2.2 bln USD windfall tax


Xinhua
26 May 2022

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For 2023, the Hungarian government is expecting an inflation rate of 5.2 percent, a deficit target of 3.5 percent, and GDP growth of 4.1 percent, according to Gulyas.

BUDAPEST, May 26 (Xinhua) -- The Hungarian government will impose a total of 800 billion forints (2.2 billion U.S. dollars) of windfall taxes, mostly on the financial and energy sectors, to curb inflation and finance rising defense costs.

The announcement was made on Thursday after the first meeting of the fifth government of Prime Minister Viktor Orban.

On Wednesday evening, Orban announced the creation of a public utility cut fund, and a defense fund.

In a video posted on his Facebook page, the prime minister said banks, insurance companies, large distribution chains, energy and trading companies, telecommunications companies and airlines would be obliged to give most of their extra profits to these funds.

The new funds will finance the government's household price cap program, and development projects for the military, Orban added.

Orban's Facebook video came a day after he imposed a state of emergency on the country, citing the difficulties caused by the Russia-Ukraine conflict.

The new measures will apply for 2022 and 2023.

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Marton Nagy, minister without portfolio for economic development, gave details of the windfall tax on Thursday. In order to meet its macroeconomic goals, he said, the government will also cut the budgets of the ministries, and reschedule public investments.

Deficit targets for 2022 and 2023 will be met by reducing expenditure by 60 percent, Nagy said, while revenues from windfall taxes could contribute 40 percent.

He listed the special extra-profit taxes that would be levied over a total of eight sectors: the banking sector: 300 billion forints, insurance sector: 50 billion, energy sector: 300 billion, retail sector: 60 billion, telecommunications sector: 40 billion, airlines: 30 billion, pharmaceutical distribution sector (large companies): 20 billion, and finally an advertising tax will also return from January 2023, set at 15 billion forints.

"The measures also guarantee that this year's 4.9 percent budget deficit target will be met," Gergely Gulyas, head of the Prime Minister's office, said at the press conference.

For 2023, the Hungarian government is expecting an inflation rate of 5.2 percent, a deficit target of 3.5 percent, and GDP growth of 4.1 percent, according to Gulyas.

As a separate measure, Gulyas said the government will from Friday forbid foreign drivers to fill up on cheap gas and diesel in Hungary.

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Fuel at Hungarian pumps is limited to 480 forints per liter, about half the equivalent price in neighboring countries. (1 Hungarian forint = 0.0027 U.S. dollars )


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