It's also taxing what it calls “extra profits” of industries including airlines, with carriers like Ryanair and
The nationalist government argues that it's trying to ease an economic downturn and the highest inflation in nearly 25 years amid
With these interventionist measures, which also include price caps on some food items, right-wing populist Prime Minister
The policies have helped lower some prices for Hungarians, but some multinational and domestic companies say they are damaging their bottom lines and competitiveness. Meanwhile, the EU has raised questions of whether the policies comply with its rules, following clashes between the 27-nation bloc and
Representing a price hike of as much as 60% for drivers with vehicles registered in other countries, the EU asked
The fuel price cap gave
“The government had to act, but instead of opting for a more market-friendly solution, they have opted for something which goes straight against the values of the
In a radio interview last week, Orban blamed the war in neighboring
“We’re now in a wartime situation, and this must be resolved,” Orban said. “(Companies) will have to shoulder more of the burden than they normally do because Hungarian families cannot pay the price for this.”
His government, also facing a spiraling budget deficit after spending billions on handouts ahead of elections in April, said industries from banking to insurance to airlines that have enjoyed “extra profits” arising from soaring demand after the pandemic should contribute to the economic recovery.
It's imposing a windfall profits tax
Some targeted industries like fossil fuels and banking are making higher-than-usual profits, but most are not, Suranyi said.
“This is not a windfall tax, this is a confiscation of the capital of these companies, which goes against the rule of law,” he said. “The airlines have definitely no windfall revenue.”
Several commercial airlines agree. The CEO of
"We call on (
Ryanair, along with British low-cost airline
Hungarian commercial bank
A government statement said companies should not pass along the costs to customers because “Hungarian families should not have to pay the price of the war.”
"The government has already indicated that it will carry out a thorough investigation of each suspected case and will take firm action against harmful practices,” the statement reads.
Some Hungarians, who earn among the lowest wages in the
“I think it’s good for us, but I’m not sure it’s sustainable in the long term,” Nikoletta Palhidi, a nurse from the village of Hetes, said recently as she fueled her car. “I don’t know that the state can keep this all up.”
“It’s good for us, but it’s a bit strange that the foreigners have to pay more. If we would go (to their countries), they’d sell it to us for more," he said.
While drivers have experienced relief, the owners of small gas stations are seeing significant shortfalls as they make no profit, said Janos Baintner, owner of a small filling station in Somogyvar in southwest
Baintner said the price cap has caused him a deficit of around
“If our profit margins are guaranteed, then we agree that fuel should be cheap in the interests of protecting families," Baintner said. "But we shouldn’t be the ones to pay the price.”
Suranyi, the former governor of
“I do have sympathy, if there is room for maneuvering, for reducing the burden on individual households once such external shocks arrive,” he said. “But to reduce the burden, the reasonable approach is definitely not a price cap.”
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