Government info: more details about fuel, food price caps revealed

In view of the war in Ukraine, the government will extend price caps on food and petrol until October 1, and the loan moratorium and cap on mortgage rates until the end of this year, the prime minister’s chief of staff said on Friday.

Gergely Gulyás told a regular press briefing that later in the year, a decision will be made on whether circumstances justify any further extension. As the war in Ukriane is driving inflation worldwide, energy prices are soaring and commodity prices are also up, partly due to the sanctions on Russia, Hungary also has to face rising inflation, he said. “Inflation will subside once peace sets in, and so the most effective tool is not arms transports and the support of the war but brokering peace,” he said.

Under the current circumstances, it is important to rein in inflation in Hungary

to counter the effects of global economic trends,

and the Hungarian government is making every effort to achieve this by protecting utility price reductions and price caps, he said.

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The government has managed to keep a 5-6 percent lid on inflation with these measures, he added. The government has imposed a 480 forint (EUR 1.2) per litre price cap on fuel for Hungarian motorists, he noted. Referring to a “letter from Brussels” calling on the government to scrap the latter, Gulyás said Hungary’s government remained committed to protecting the people and the economy from soaring fuel prices.

A similar Italian measure has prompted lawsuits, which the country eventually won,

he noted.

Regarding the sanctions on Russia, Gulyás said the government would continue to back only those sanctions which don’t hurt Hungary and Europe more than they hurt Russia, adding that an embargo on Russian gas imports would threaten the entire continent’s gas supply.

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The decisions taken by Brussels so far have contributed to the record-high inflation rate, he said, adding that the imposition of a gas embargo would put the energy supply of the whole of Europe at risk. He called on the European community to return to the sanctions as described in the “consensus reached in Versailles”, which exempted energy resources from the sanctions imposed on Russia as a response to the war in Ukraine.

While “we somehow got over the issue of coal and oil”,

further sanctions on gas deliveries would have “extremely negative effects”,

he said.

Meanwhile, Gulyás also said the Hungarian government did not support the introduction of a global minimum tax, a position which the finance minister would hold firm on at Friday’s Ecofin meeting. This matter requires a unanimous decision, which cannot be reached without Hungary, he added.

Gulyás said

a global minimum tax would force Hungary to double tax burdens on businesses,

arguing that they currently pay a rate of 7.5 percent and the global minimum tax rate would be 15 percent. The global minimum tax would cost Hungary its tax advantage in the region and Europe, and place burdens on businesses that would be too heavy even in a normal economic situation, let alone in a time of war, he added.

Gulyás said the economic crisis caused by the war called for economic growth, tax cuts and investment promotion with a view to protecting jobs.

He said the reason why the Hungarian government had originally been in favour of a global minimum tax was because it was supposed to be imposed on tech giants that avoided paying all their taxes. Yet these sort of companies are not included in the current package while all other types of commodity producing companies are, he said.

Gulyás said the “EU is rushing into things again” and would introduce the new tax when it was uncertain that the package would be backed by the US Congress given the upcoming midterm election there. He noted that a Republican-backed organisation that deals with taxation opposes the minimum tax.

In response to a question, Gulyás said

the government continued to reject a congestion fee for Budapest motorists,

adding that the measure would “make motorists’ life impossible” in the city.

Gulyás accused the Budapest municipality of aiming to “make life impossible for motorists in every other way”, and warned politicians against “handing out lifestyle advice”. Hungarians have a right to live as they like, within the confines of the law, he said.

“Although 21st century Liberalism actively opposes freedom in western Europe, it is not a good discipline to transfer to Hungary,” Gulyás said. The government can only provide incentives, he added.

Source: MTI