Radical decisions taken by the Hungarian government overnight

Thursday marked the start of a new month, and the Hungarian government celebrated with a number of new regulations. Among many other things, four major government decisions were taken. Here are the details.

A new tax that hurts many

The latest issue of the Hungarian Gazette was published on Wednesday evening around 11 PM. In it, 3+1 important government decrees were published. They affect economic operators, investments, savings, and therefore millions of people.

According to portfolio.hu, the government’s unstated aim with the new regulations is to channel the public and the financial sector into government bond investments through a variety of instruments.

The government decree on the different applications of Act LII of 2018 on the social contribution tax during an emergency states that the government will introduce a 13 percent social contribution (szocho) on top of the existing 15 percent interest tax on savings.

It is payable on the capital gains on the interest accrued after 1 July and on the capital gains on newly purchased securities.

Although it was previously announced as temporary and opposed by the European Commission, the Hungarian government will keep the extra profit tax in 2024.

Government bonds strengthen, letter to banks

The government is limiting the vast majority of investments in some investment funds to government securities. This radically interferes with the investment rules of some institutional investors.

The government has also required banks to broadcast negative advertising to their own customers, thereby discrediting the bank’s own products and services. The new government regulation states that financial awareness must be developed in Hungary. To this end, financial institutions will be required to send letters showing how much their customers would have gained if they had put their money in government securities as opposed to bank deposits.