Here are the details of the government’s new “extra profit” tax

The cabinet has decided to set up a fund for protecting the cap on utility bills and is introducing a tax on extra profits to finance it, Márton Nagy, the minister of economic development, said in an interview to public radio on Sunday. This year the fund will be worth 800 billion forints (EUR 2.04bn), while next year it will reach 1,000 billion forints, he added.

The details of the decision will be published in the Hungarian Gazette at the weekend, he said. Nagy said the new tax on banks, energy and trading companies and airlines, among others, would be temporary and targeted. Banks and multinationals have made big profits on the back of rising interest rates and prices, and they must pay their share of the public burden, he added.

Companies will be monitored to ensure that they don’t pass on the cost of the tax to consumers,

he said.

Nagy said ministry budgets are being cut by 10 percent, with savings of 581 billion forints expected this year and 500 billion the next.

• Read also: Will large companies finance the cap on utility bills in Hungary?

Also savings of 1,150 billion forints will be made in 2022-2023 by rescheduling and postponing certain public investments, he added. A further decision will be made regarding price caps on certain foods and fuels which expire on July 1, depending on the rate of inflation — which, he added, had not yet peaked in respect of the products in question.

Meanwhile, financial support packages will be focused on households, Nagy said, noting that

local councils and businesses would no longer enjoy government subsidies.

Related savings are targeted at over 2,000 billion forints per year, with a view to hitting the budget deficit target of 4.9 percent of GDP this year and 3.5 percent in 2023.

A top government priority remains to protect full employment and maintain the purchasing power of pensions, family benefits and the cap on household utility bills, Nagy said.

Read alsoHow much can Hungarians save due to the fuel price cap?

Source: MTI