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Fuel Price Cap: Motorists Saved 22 Billion Forints, State Gained Several Hundred Million, Gas Stations Lost Billions

Hungary Today 2022.02.22.

Drivers have saved a total of 22.4 billion forints (EUR 63 million) since the introduction of the fuel price cap in November 2021, while the state can also report revenue from the measure. The absolute losers are the smaller gas stations. They negotiated with the government on Monday and listed some proposals to mitigate their losses, but no concrete compromises have been reached yet. In the meantime, the Association of Independent Gas Stations has formed and adopted a statement on the freezing of fuel prices, protesting against the measure.

This article was originally published on our sister-site, Ungarn Heute.

Motorists saved a total of 22.4 billion forints since the fuel price cap

Motorists have saved several billion forints since the introduction of the cap on fuel prices, the head of the Energy and Climate Policy Department of the pro-Fidesz Századvég Konjunktúrakutató, Olivér Hortay, announced on Tuesday, referring to the institute’s latest research. According to their estimates, consumers could expect another 44 billion forints in savings by mid-May.

However, many criticize the measure and would rather reduce the VAT, to which Hortay responded:

Tax cuts are ‘swallowed’ most by the retailers themselves, so they are not reflected in retail prices, or only to a small extent, and the government would have no further room for maneuver thereafter.”

Price Cap on Fuel: Proposals Sent to Gov't to Save Gas Stations
Price Cap on Fuel: Proposals Sent to Gov't to Save Gas Stations

"We do not deny that the measure is necessary, but we try to point out in the negotiations that in this situation the small businesses will go bankrupt," said the secretary-general of National Association of Entrepreneurs and Employers (VOSZ).Continue reading

State records profit due to increase in traffic

There are three types of parafiscal levies on fuels: the 27% VAT, the fixed excise tax, and the so-called MSZKSZ fee (stockpiling fee). Currently, based on official pricing, a maximum of 480 forints (EUR 1,35) may be charged for both gas oil and 95-grade gasoline, but according to holtankoljak.hu’s calculations, the former would cost 535 forints (EUR 1,50) and the latter 520 forints (EUR 1,46) without the regulation. These cheap fuel prices have boosted fuel tourism, and the trucks of large foreign companies save a lot when they fill up at local gas stations.

This has significantly boosted domestic fuel sales and, in particular, diesel sales. In December, 9.2 percent more diesel was sold at gas stations than in the same period of 2019, compared to an average increase of only 2 percent in the first 11 months,”

according to economic portal G7. The article adds that the higher sales volumes were easily recovered, however, and the total taxable value of diesel sales at gas stations exceeded the level without price freeze by 920 million forints (EUR 2,6 million). It should be added that the total VAT revenue is not the actual government revenue, as only final consumers pay VAT. However, most of the diesel sold at domestic gas stations is purchased not by households but by companies (forwarders, transport companies, etc.), which can and do reclaim VAT on diesel.

From Now On, All Gas Stations Lose Money on Fuel Sales
From Now On, All Gas Stations Lose Money on Fuel Sales

Gas stations make more than an 8 forints loss when they sell a liter of gasoline, and an 18 forints loss when they sell a liter of gas oil. This results from the fact that the purchase price is higher than the capped consumer price.Continue reading

Independent gas stations: “Freezing fuel prices affect the livelihoods of 10,000 families”

The Association of Independent Gas Stations has since formed and adopted a statement on the freezing of fuel prices. Gábor Egri, president of the association, told state news agency MTI that people are joining the association all the time. So far, a total of 160 people are members, operating 300 to 400 gas stations, covering about 15 percent of Hungary’s gas station network.

The association supports the government’s family policy, but not at the expense of families. The freezing of fuel prices affects the livelihood of 10,000 families,

says the statement.

In their letter, the association calls for the legal establishment of the official price that will ensure the existence of family businesses. They propose the exemption of excise tax from VAT and the reduction of VAT on fuel to 5%. The association also stated that it would seek a joint solution to the problem with the government.

Source: 24.hu

Featured image via Zsolt Czeglédi/MTI

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