Orban taxes big business and cuts spending after EU blocks funds
HUNGARIAN prime minister Viktor Orban has unveiled a broad set of windfall taxes on big businesses after declaring a state of emergency last month.
The Hungarian prime minister also announced £4.9bn of spending cuts after the European Union blocked billions of euros in funding from flowing to the country, which has become politically isolated within the bloc.
Temporary levies of up to 10pc of revenues will be imposed on the banking, airline, energy, retail and telecommunications sectors. Central government expenditure will be slashed over the next two years, with reductions of 581bn forint (£1.3bn) and 500bn forint over 2022 and 2023 respectively.
A further 1.15 trillion forint of state investments will be suspended until the end of next year, while utility subsidies
will be restricted to households. Mr Orban declared a state of emergency a fortnight ago, to allow Hungary to respond more quickly to the challenges being thrown up by the war in Ukraine, with which it shares a border.
“We have seen that the war and sanctions from Brussels have brought about a great economic upheaval and drastic price rises,” he said at the time.
“The world is on the brink of an economic crisis. Hungary has to stay out of this war and has to protect the financial security of families.”
It came after he secured a fourth consecutive term as prime minister at elections in April. Hungary has become a thorn in the side of EU leaders after frustrating Brussels plans for a coordinated embargo on Russian oil.
The country’s financial assets went into a tailspin last week, sending the forint to a record low against the dollar.
Mr Orban’s windfall taxes include a levy on bank revenues of 10pc during 2022 and 8pc in 2023. Oil companies taking advantage of Moscow’s discounted oil will be forced to pay a 25pc tax on the difference between Russian crude and benchmark Brent.
Telecommunications and retail companies will have to pay a sliding scale tax of up to 7pc and 4.1pc respectively on sales, while airlines will pay a 3,900 forint departure fees for travel across most of Europe, and 9,750 forint for further destinations.