Kormányinfó: We must build a crisis-resilient economy while protecting Hungarians

Extra-profit taxes should contribute to the financing of public utility price cuts and the costs of national defense, ministers Gergely Gulyás and Márton Nagy announced at today’s Kormányinfó press briefing.

Today’s Kormányinfó briefing, hosted by ministers Márton Nagy and Gergely Gulyás, outlined government measures taken in the wake of the war in Ukraine and the looming economic crisis, following a cabinet meeting with the new government members.

Gergely Gulyás, minister heading the Prime Minister’s Office, reiterated that the government had decided to declare a state of emergency because of the threat of a humanitarian disaster and economic crisis due to the war in neighboring Ukraine.

In the elections, voters empowered the government not to let Hungary drift into war and to make the Hungarian economy crisis-resilient, he noted. He stressed that the war and the sanctions policy had caused public utilities in Western Europe to rise radically, but Hungary had managed to maintain its price cuts.

Gulyás stressed that the government has taken decisions and will submit a budget to parliament that will ensure the protection of the achievements of recent years. In this situation, companies that make extra profits from rising prices and interest rates are expected to help the Hungarian economy and contribute to the country’s defense costs, whether it is spent on the reduction of utility prices or on national defense. The draft budget will be submitted by the finance minister to the Budgetary Council on Thursday and is expected to be discussed by parliament in the first half of June.

The ministers outlined that the government insists on a deficit-to-GDP ratio of 4.9 percent this year and 3.5 percent next year, with inflation at 5.1 percent and economic growth at 4.1 percent, adding that keeping public debt under control will also remain a priority. They emphasized that the government has so far always managed to keep to its budget targets.

A special mention was also made of the fuel price freeze, which ensures the best prices in Europe, but due to a high level of abuse, starting tomorrow, only cars with Hungarian registration plates will be allowed to fill up at gas stations with the reduced price. The aim of this move is to safeguard supply security, Minister Gulyás underlined.

Minister of Economic Development Márton Nagy said that increasing government revenues will be mainly provided by extra-profit taxes, but cuts will also be made on the expenditure side to reach the deficit target. Meanwhile, the government seeks to ensure the protection of its family policy, full employment, the purchasing power of pensions and public utility price cuts.

In terms of reducing expenditures, ministries are planning to run on a tighter budget, while public investments will be rescheduled and the focus will be primarily on encouraging market investments.

Special taxes will be financed by extra profits from the banking, insurance, energy, retail, and telecoms sectors, as well as airlines and pharmaceutical distributors; the advertising tax will also be reinstated, which is expected to generate more than HUF 800 billion.

Minister Nagy stressed that it is not the profit but the extra profit that is being taken away, thus it is unlikely this new tax will affect consumer prices.