Emergency order targets ‘extra profits’

Hungary will order banks, insurers, airlines and other big corporations to hand over “extra profits” to fund the military

Hungary intends to fund the military and social safety programs by taxing banks, insurance companies, airlines, energy and telecom utilities and others, Prime Minister Viktor Orban announced on Wednesday.

It is his first action under a state of emergency that Budapest has just enacted, citing the conflict in neighboring Ukraine.

“We ask and we expect that those who made extra profit in this time of war help the people and contribute to the national defense budget,” Orban said in a video posted on Facebook. 

In a follow-up post, Orban said that a “drastic increase in prices” was due to the ongoing conflict and the “sanctions policy in Brussels,” while “banks and large multinational companies” are reaping extra profits thanks to rising interest rates.

To fund the military and social safety networks, the Hungarian government has set up two funds, and will “require banks, insurers, major trade chains, energy and retail companies, telecommunications companies and airlines to deposit a large portion of their extra profits” there.

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Prime Minister of Hungary Viktor Orban © Omar Marques / Getty Images
Hungary declares state of emergency

This regime will be in effect for the rest of 2022 and 2023, Orban added.

Budapest announced the state of emergency on Tuesday, just hours after Orban’s new cabinet was sworn in. The Hungarian parliament quickly approved a constitutional amendment allowing emergencies to be declared in case of war in a neighboring country – in this case, Ukraine. 

Orban’s extra-profit tax affects mainly multinational companies. According to Bloomberg News, it will help shore up Budapest’s budget due to a de facto EU embargo. Brussels had imposed a funding freeze against Orban’s government following his landslide victory in last month’s election, citing “rule of law concerns.”

The funding freeze regulations were adopted by the EU administration in order to pressure the governments in Hungary and Poland to follow the policies of Brussels when it came to immigration, judiciary, LGBT issues and other matters in which Budapest and Warsaw have dissented.  

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