Price caps extended, global minimum tax refused, national interests protected

The Hungarian government made some pretty important decisions in the last couple of days. Here’s a brief summary of this morning’s Government Info press conference.

Speaking at the weekly presser, Gergely Gulyás, the minister heading the PM’s office, said that the Hungarian government will continue to support only those sanctions that do not hurt Hungary and Europe more than they hurt Russia. In the case of a gas embargo, Gulyás added, the supply of gas to all of Europe would be at risk.

Focusing on record-high inflation rates within the eurozone, Minister Gulyás said that energy prices have increased dramatically due to the war in Ukraine. “The closer you are to the war zone, the higher the inflation. War inflation will disappear only when there is peace,” he said.

The Hungarian government, however, is doing its utmost to combat rising inflation. Just yesterday, Prime Minister Orbán announced that Hungary would extend fuel and food price caps until October 1, with the moratorium on loan repayments and interest rate cap extended until December 31.

According to Minister Gulyás, the government estimates that without the price caps and the utility cost reduction program, inflation rates would be around 5-6 percent higher than the current level. The government will assess the option of further extending the price caps in the future.

On another hot topic, Minister Gulyás said that Hungary also has a very strong position regarding the global minimum tax proposal, which is currently in front of the EU’s council of finance ministers. A global minimum tax, Gulyás said, would force our country to double the tax burden on businesses. This would mean Hungary would lose its tax advantage, and businesses would face an extra burden that would be difficult to bear even in a normal economic period, the minister explained.

“Budapest initially supported the idea because it would have prevented tax avoidance by large multinationals. However, large multinational companies were later excluded from the proposal and will thus not be subject to it, tipping the balance in their favor and against other companies operating here,” Minister Gulyás said.