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Forint reacts badly to government tax increase plans – UPDATED
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The Hungarian government introduced several so-called windfall or excess profit taxes last year after Orbán won another supermajority in the general elections. Of course, all the companies concerned in the banking or retail sectors passed the burden onto their customers. The cabinet promised they would withdraw the extra tax soon after the economy stabilises. However, they remained and will remain in 2024. Furthermore, Hungary’s finance minister talked about increasing banking windfall tax, which hit the forint badly.
According to portfolio.hu, the finance minister, Mihály Varga, and the governor of the Hungarian national bank, György Matolcsy, clashed again at an economist conference in Eger, Eastern Hungary. Varga said the budget did not look good. Varga added they would like to keep the budget deficit below last year’s 6.2%. According to hvg.hu, this year’s budget deficit will be between 3.9 and 6.2%.
Varga said they might raise the banking windfall tax because those financial institutions have a high-profit rate. Furthermore, he talked about supervising state-supported loan programs, reducing the expenditures of the cabinet and suspending ongoing projects. He slammed some government and national bank decisions for the high inflation (e.g. the belated interest rate increase), adding that the core problem was the Hungarian economy’s energy dependency.
While Varga tried to be optimistic, Matolcsy was not. He slammed Varga, Orbán and the government for the “inflation catastrophe”. He called the high inflation an “economic mass accident”.
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National bank governor slammed the government and even Orbán
He blamed the government’s expenditure decisions between 2021 and 2022 for the high inflation, including the 13th month pension and a tax refund for the children-raising Hungarian families. That is why the inflation skyrocketed, and the government did not even support the fight against it. Matolcsy also blamed the price caps for inflation. He said their introduction fuelled the inflation trend by 3-4%. Matolcsy said the government’s economic policy was lightheaded, resulting in high inflation. He added that Orbán’s plan to double Hungary’s GDP by 2030 is impossible. It would need a 10% annual growth. But that would mean 6-9% inflation. Such a growth would be devoured because the previous cheap money era is over.
The clash between the minister and the governor and the minister’s plan to increase taxes had a considerable impact on the exchange rate of the forint. The Hungarian currency weakened and left the 380-385/EUR level. Portfolio said that provided that trend did not stop, we might reach the 390/EUR level soon. On Friday morning, for example, the rate was above 388/EUR.
“The cabinet promised” … Bit of a pattern, with our Politicians. We will relinquish our Emergency Powers once the crises subside! The Land of Unicorns is just around the corner. Just stick with us!
We still have the lowest corporate income tax in Europe. If you believe our Politicians, we can’t go up because the companies would leave Hungary, as the world is moving to a 15 percent Global Minimum Tax which we tried to veto. To fund this, we have the world’s (Yes. WORLD) highest VAT rate, paid by end consumers. Go figure.
On that happy note: Let´s buy an airport, shall we?
Mihaly Varga – Finance Minister of the Orban Government, a “founding” Father – of the Fidesz Political Party, up to his neck, in the cataclysmic MESS, that is FACT, the Hungarian Economy – and WORSENING.
Varga – was warned – “put on notice” – loud & clear, pre the outbreak of the Corona Virus Pandemic, that his “signed off” Financial & Economic “paths” – that Varga & Orban, had sent Hungary on, the policies, of Varga & Orban, those of greater RESPECTABILITY and Intellect, on European & Global Economic & Financial affairs, the HIGH Risk they had EMBARKED – sent – set Hungary on.
” I Rest my Case” – what Varga & Orban – what they have GIVEN us as a country to live in to-day.
Hungary – FACT.
The propulsion / pace, speed at which – the SOCIAL divide is growing, occurring in Hungary / is an ADBOMINATION.
The Rich in Hungary continue to get RICHER and the poor, in growing in the THOUSANDS – who get POORER.
The Orban Government is STRANGULATED by its own doings – that Mihaly Varga, as Finance Minister and Victor Orban as Prime Minister – 14 plus years – a “team” – Varga & Orban, – the DESTRUCTION, an Incineration, they have accomplished of Hungary.
Varga & Orban – they were WARNED – “Put on Notice” – and they have FAILED us as citizens and Hungary, our FUTURE.
NOTHING – taxes exampled, nothing across the entire componentry of the Hungarian Economy – is going to get CHEAPER.
Just to clarify, we, the Hungarian Nation, are not in “war times”. Ukraine is in war times and we completely support their aggressors with the government’s ridiculas calls for “peace” that offer no plan at all. If we do not wake up and remove the cancer that is our government at the moment, they will all flee to the east and leave us holding the bag of debt.