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A day after declaring a state of emergency, Hungarian leader Viktor Orban said on Wednesday that big companies operating in the country, including energy companies, would be forced to turn over “extra profits” to the state to fund subsidies.
Banks, retailers, airlines, energy companies and all other large corporations in Hungary will be obliged to pay a “large part of their extra profits” to the state this year and next, Orban said in an announcement made on Facebook.
The “windfall taxes” would be placed into state funds to help subsidize soaring food and energy prices and consumer energy bills, as well as to prop up Hungarian defenses amid Russia’s war on Ukraine.
More details are expected on Thursday.
Orban’s announcement comes a day after a declaration of emergency on Tuesday, the same day that the new Hungarian government assumed office.
Hungary’s Fidesz ruling party, in control of parliament, amended the country’s constitution Tuesday, paving the way for the prime minister to declare a state of emergency, citing a war that puts Hungarian security at risk, from physical and financial, to energy.
The Hungarian PM has blamed both the war and EU sanctions for “huge upheaval and a drastic rise in prices”, EURACTIV reported.
Orban, who strongly opposes a proposed EU ban on Russian oil, won a fourth consecutive term in office in April elections, and the constitutional amendment allowing for a state of emergency gives him the power to approve measures by decree.
Investor confidence is expected to take a hit, much like it did in 2010 when Orban made a similar move against big companies, imposing a windfall tax to make up for budget shortcomings.
On Wednesday, European Council President Charles Michel said he was optimistic that a deal on a Russian oil embargo could be reached ahead of a summit in Brussels scheduled for Monday. However, European Commission president Ursula von der Leyen has warned against “false expectations”.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com