BUDAPEST, May 25 (Reuters) - Hungary's government will
impose windfall taxes on banks' and large private companies'
"extra profits" in a bid to rein in a swelling budget deficit,
turning again to a policy that has helped Viktor Orban avoid
raising taxes for families.
Prime Minister Orban announced on his Facebook page that
banks and companies that make "extra profits" amid the difficult
situation of war in Ukraine and surging prices, will have to
contribute to the costs of strengthening the army and financing
caps on households' energy bills.
The announcement came a day after Orban's government
attained special powers by declaring a state of emergency due to
Orban added the windfall taxes will apply in 2022 and 2023.
He said there would be a time limit for the levies, but some of
his earlier special taxes have become a lasting part of the tax
Nationalist Orban swept to power in 2010 and won a fourth
consecutive term in elections last month with a landslide in
after a pre-election spending spree.
He said 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
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 sharply to 394 versus the euro
by 1710 GMT on Orban's comments from around 389 before, while
OTP Bank shares plunged 4.69% earlier on Wednesday.
Analysts said the energy bill caps and the army development
fund were two huge items, amounting to well over 1 trillion
forints, and the devil would be in the details.
David Nemeth, an analyst at KH bank, said investors could
prepare for special taxes and a budget adjustment, knowing that
the government does not like burdening the population directly.
However, he said that if banks and companies pass some of
the burden onto customers by raising prices, then people will
still end up paying some of the price of the taxes.
The Hungarian Bank Association and OTP declined immediate
comment. Magyar Telekom was not reachable for comment.
Faced with a surge in inflation, Orban had earlier imposed
caps on prices of basic foods, fuels and mortgages.
(Reporting by Krisztina Than and Anita Komuves, Editing by