Hungary’s Orban aims to keep price caps alive, flags windfall taxes

11:27 am Wednesday, April 06th, 2022

BUDAPEST (Reuters) -Hungary will aim to keep price caps in place beyond their looming expiry in the first half of 2022 unless inflation eases significantly, Prime Minister Viktor Orban said on Wednesday, as he unveiled the main economic priorities of his next government.

Orban, whose government has pursued close business relations with Moscow for over a decade, swept to power for a fourth consecutive term in elections on Sunday.

Orban stabilised the economy with a host of windfall taxes on banks, retail and energy firms after taking power in a 2010 landslide that helped reduce Hungary’s budget deficit while avoiding austerity measures, shoring up Orban’s poll standings.

“Whether we will need special taxes on multinational companies or others like the ones levied after 2010 will depend on the decision of the European Union,” Orban told a news conference.

“If the EU cannot tame the rise in energy prices, then we will have to take some measures in Hungary. They call them taxes on windfall profits, which are earned in certain sectors and which can help fund policies protecting families.”

He did not elaborate on what sectors could be affected of the amount of revenue targeted from any such measure. Orban also needs to reduce a swelling budget deficit.

Faced with a surge in inflation to near 15-year highs ahead of the vote, the 58-year-old nationalist leader imposed caps on basic foods, fuels and mortgages, extending price curbs on household energy bills in place since 2015.

However, economists say the increase in European gas prices is making the cap on household bills unsustainable, while the cap on fuel prices in place since mid-November is causing losses for Hungarian energy group MOL.

“The price caps measures have an expiry, they will stay in place until then definitely, and I would like to keep them as much as possible later as well, we are negotiating … we need to have talks with banks, MOL… food retailers,” Orban said.

(Reporting by Krisztina Than and Gergely Szakacs, editing by Ed Osmond)