Here are the details about the newly introduced windfall taxes!
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Hungary’s government considers the protection of the country’s security and economy its two most important responsibilities amid the war in Ukraine, the prime minister’s chief of staff said on Thursday.
The government must do everything in its power to protect the scheme to reduce household utility bills, and to defend family subsidies and pensions, Gergely Gulyás told a regular press briefing. The government has made decisions and is submitting a draft budget to parliament that ensure the protection of its achievements of the last several years, he said.
Though there is no indication of any direct threats to Hungary because of the war,
there is a threat of a humanitarian disaster and the effects of the war on the economy are also severe, Gulyás said. The protracted war and the energy crisis raises the threat of a new global economic crisis, he said, adding, at the same time, that Brussels’s sanctions on Russia were also to blame for the steep price rises.
In the current situation, companies that amass profits through rising interest rates and higher prices can be expected to contribute to the costs of protecting Hungary, whether those go towards the utility price cuts scheme or defence, Gulyás said.
He noted that the windfall taxes announced by the prime minister on Wednesday will be collected into the utilities protection fund and defence fund set up by the government in order to ensure that the utility bill cuts scheme and defence developments can be financed in the long term. The measures also guarantee that
the government can meet its deficit target of 4.9 percent of GDP this year,
he added.
He said the 2023 draft budget assumes a GDP of 68,000 billion forints (EUR 175.4bn) and has a headline number of around 26,000 billion forints. It targets a budget deficit of 3.5 percent, calculates with a growth rate of 4.1 percent and projects an inflation rate of 5.2 percent, he added. The finance minister is submitting the draft budget to the Fiscal Council today, and parliament is expected to debate the bill in the first half of June, he said.
Márton Nagy, the minister for economic development, said that with
another economic crisis looming,
it was key to build a resilient economy and keep the budget and state debt firmly in hand. Nagy said the government was “adamant” that the deficit should not exceed 4.9 percent of GDP in 2022 and 3.5 percent next year. The government is setting up a utilities protection fund and a defence fund, he said, adding that their financing would be expensive due to rising energy prices and the war in Ukraine.