Nagy said the sectors affected by the taxes knew that extra profits were “profits they didn’t earn”, adding that the government expected the businesses in question not to shift the taxes onto consumers.

A total of 900 billion forints (EUR 2.3bn) will be put into the new utilities protection and defence funds this year, Nagy said, adding that 700 billion of it will be spent on protecting the government’s scheme to cut utility bills and 200 billion on defence. Both funds can still be topped up next year, he said.

In addition to the windfall taxes, the government will also collect around 100 billion forints through smaller tax increases. This will include an increase in the excise tax on alcohol, the public health tax and the tax on company vehicles, among others, the minister said.

Nagy said the move to re-channel the extra profits of businesses would not impact their decision on whether or not they remain in the country. Over the last 12 years, the share of Hungarian ownership within the banking sector has risen above 50%, he said, adding that less than 20% of insurance sector players were Hungarian-owned.

As regards consultations on the new taxes, Nagy said he had discussed the matter with the banking association on Wednesday and had met energy sector representatives on Thursday.

Concerning the government’s decision to postpone 861 billion forints’ worth of public investments, Nagy said Hungary had an investment rate of 27%, of which public investments accounted for 5-6%, the highest ratio in Europe.

The government will continue to promote market investments, he said, adding that the drop in public investments would not have such a significant impact. Asked about inflation, Nagy attributed 80% of price rises to global reasons, primarily to rapid increases in energy and food prices.

The minister said Hungary’s 9.5% inflation rate was “way below the double-digit figures” seen in most European countries. He added that the price caps mitigated inflation by 5-6 percentage points. The central bank has forecast the rate to peak in the summer, to be followed by a decline to 5% by next year, he said.

Windfall Taxes Set To Raise Around HUF 800 Billion in Hungary

Hungary’s government will raise around 800 billion forints (EUR 2.06bn) over the next two years from new windfall taxes imposed on banks, insurers, retail chains, energy companies, telcos and airlines, the minister for economic development said.

Márton Nagy told a press briefing that with another economic crisis looming, it was crucial to build a resilient economy and keep the budget and state debt firmly in hand.

The government is setting up a utilities protection fund and a defence fund which will be expensive to finance due to rising energy prices and the war in Ukraine, he said.

The government aims to raise an annual 300 billion forints from the banking sector, including 50 billion by expanding the transactions duty, Nagy said.

A total of 50 billion forints will be collected from insurers and 300 billion from energy sector companies, with a large chunk to be collected from Hungarian oil and gas company MOL, the minister said.

The government will collect 60 billion forints from retailers, 40 billion from telcos, 30 billion from airlines and 20 billion forints from pharmaceutical sector companies, not including small pharmacies, he added.

The government will also reintroduce the advertising tax from 2023, raising 15 billion forints of budget revenue, Nagy said.