GKI CEO on Govt’s Windfall Taxes: ‘No Such Thing as Extra Profit’

Hungary Today 2022.05.27.

According to the CEO of GKI Economic Research Zrt., there is no such thing as extra profit, and he does not understand why special taxes are not imposed on successful sectors instead. Meanwhile, the CEO of Gránit Bank says no one expected the special tax announced by Viktor Orbán, and although she is not happy about the new bank tax, if it stabilizes the economy, it is probably good for everyone.

As we reported, Viktor Orbán announced an extraordinary decision on Wednesday to tax big companies in Hungary and to set up a tax protection and defense fund. Márton Nagy, Minister for Economic Development, said at Thursday’s government briefing that only what the government considers “extra profits” will be taxed.

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According to the CEO of economic research at GKI, László Molnár, it is incomprehensible why the government does not instead impose a special tax on successful sectors such as construction. He added that there is no such thing as extra profit in economics.

If you look at what the government is taxing, it seems so far that it will be retail, which has been the main focus, banks and insurance companies. In the case of insurance companies, their profit as a percentage of turnover is within the national average, and the same can be said of retail,”

Molnár told RTL News. He added that this alone would not justify a higher tax rate.

Fact

According to Index, the extra profit tax for retailers will be as follows:

The rate of 2.7 percent for businesses with revenues above EUR 100 billion will rise to 4.1 percent.
Between €30 billion and €100 billion, the rate will be 1 percent, up from 0.4 percent.
Between 500 million and 30 billion will remain at 0.1 percent.

The exact rules will be published in the Hungarian Gazette (Magyar Közlöny) soon.

Meanwhile, Éva Hegedűs, CEO of Gránit Bank said at the bank’s annual review that,

This is not good news, especially since no one expected that, based on the plans for 2022, we would have to pay an additional tax on top of the existing ones.”

Fact

BDPST Group is a real estate investment company in Hungary, which is also the majority owner of Gránit Bank, a Hungarian bank operating under a digital business model. A major shareholder of the BDPST Group is István Tiborcz, Prime Minister Viktor Orbán’s son-in-law.

Hegedűs also said that

We are not happy about the new bank tax, but if it stabilizes the economy, it is good for everyone. I understand that the budget deficit has to be corrected. This can be achieved by reducing spending and increasing revenues. The economic actors must go hand in hand.”

Source: Index, Napi.hu

Featured image: László Molnár, at the international conference on the occasion of the 20th anniversary of the establishment of GKI at the Corinthia Hotel in Budapest on March 26, 2013. Photo by János Marjai/MTI