Hungary to impose windfall taxes on banks, companies

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© Reuters. FILE PHOTO: Hungarian Prime Minister Viktor Orban stands before taking the oath of office in the Parliament in Budapest, Hungary, May 16, 2022. REUTERS/Bernadett Szabo

BUDAPEST (Reuters) – Hungary will oblige banks, telecoms firms, large retail chains, insurers, energy companies and airlines to pay a “large part of their extra profits” into the state budget, Prime Minister Viktor Orban announced on Wednesday on his Facebook (NASDAQ:) page.

Orban said the windfall taxes will apply in 2022 and 2023. He said that banks and companies that make “extra profits” in the current difficult situation amid the war in Ukraine and surging prices, will have to contribute to the costs of strengthening the Hungarian army and financing caps on households’ energy bills.

Orban did not elaborate on the amount of revenue targeted from the new measures, saying all details would come on Thursday.

“We will oblige banks, insurers, large retail chains, the energy industry and trading firms, telecoms companies and airlines to pay a large part of their extra profits into two state funds,” Orban said. The two funds would finance the costs of energy price caps for households and the development of the army.

This is not the first time that Orban, who swept to power in 2010 and won a fourth consecutive term in elections last month, decided to impose windfall taxes on banks and other sectors to plug holes in the state budget.

Orban stabilised the economy with a host of windfall taxes on banks, retail and energy firms after 2010 which helped reduce the deficit but eroded investor confidence.

The forint eased to 391.75 versus the euro from around 389 after Orban’s comments, while OTP Bank shares plunged 4.69% earlier on Wednesday.

Faced with a surge in inflation, the nationalist leader had imposed caps on prices of basic foods, fuels and mortgages, on top of capping energy bills.

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