Hungary imposes 'defence contribution' on companies, banks that make 'extra profit' on war

Anti-war action plan

The government will oblige political parties and media to disclose their foreign funding, said Gergely Gulyás, Prime Minister Viktor Orbán's chief of staff, outlining the first step in the anti-war action plan.

The minister said this was necessary to combat "pro-war propaganda" abroad.

Gulyás added that legally, of course, only the media can receive funds from abroad. "Hungary reserves the right to return to the sender any funds from abroad that are used for war propaganda."

The Minister of Justice will be tasked to work out how to regulate this, although there are EU regulations on this, the government supports a solution that is slightly more aligned with the rule of law, because that [EU rule] is too harsh and radical, Gulyás said.

It is unclear what Gulyás was referring to. When it comes to foreign subsidies potentially distorting competition, the EU does have strict rules in place (Foreign Subsidies Regulation). However, when it comes to financing media, transparency is stressed mainly in terms of public funding. The EU highlights that media freedom and pluralism have to be safeguarded, including (i) independence of the media regulatory authorities, (ii) transparency of media ownership, (iii) transparency and fairness in the allocation of state advertising, and (iv) safety of journalists and access to information.

Asked who will determine the sanction if a TV, radio or newspaper is found to be broadcasting war propaganda, Gulyás, replied that the Minister of Justice will be able to answer this question and will draft the bill. The ministry will only be able to examine sources outside the EU.

Gulyás was asked later which media outlets they believe broadcast war propaganda. He reiterated that the Justice Minister is tasked with working out the details of the regulation and Bence Tuzson has until early September to do so.

EU regulation targeting Russian media is similar to the Hungarian draft in that it is about media

Gulyás has compared the Hungarian draft, which would require media to report on all subsidies received from outside the EU, to the European Union's Council Regulation 2024/1428, but he said that they are similar in that both concern the media.

The EU regulation applies to Russian media, banning media that pose hybrid threats in Europe. According to Gulyás, such a strong provision is more of a deterrent, and the Hungarian government does not want to ban newspapers. He did not give a clear answer as to whether Hungarian media also engage in hybrid activities.

In its regulation, the Council said Russia has "engaged in a systematic, international campaign of media manipulation and distortion of facts in order to enhance its strategy of destabilisation of its neighbouring countries and of the Union and its Member States.

In particular, the propaganda has repeatedly and consistently targeted European political parties, especially during election periods,

as well as targeting civil society, asylum seekers, Russian ethnic minorities, gender minorities, and the functioning of democratic institutions in the Union and its Member States."

In order to justify and support its aggression against Ukraine, Russia has

engaged in continuous and concerted propaganda actions targeted at civil society in the Union and neighbouring countries, gravely distorting and manipulating facts.

"Those propaganda actions have been channelled through a number of media outlets under the permanent direct or indirect control of the leadership of the Russian Federation. Such actions constitute a significant and direct threat to the Union’s public order and security. Those media outlets are essential and instrumental in bringing forward and supporting Russia’s war of aggression against Ukraine, and for the destabilisation of its neighbouring countries."

In order to protect freedom of expression and of information, the EU suspended the broadcasting activities of several media outlets in the EU or directed at the Union. "Those measures should be maintained until the Russian aggression against Ukraine is brought to an end, and until the Russian Federation, and its associated media outlets, cease to conduct propaganda actions against the Union and its Member States," the regulation reads.

444.hu banned in Russia

Before the ruling Fidesz-KDNP majority adopted the law on the protection of sovereignty, Gulyás said that it would only apply to political parties, not to the press - yet whistle-blower site Átlátszó has recently been investigated, along with Transparency International Hungary.

Gulyás said there was nothing to see here, that editorial freedom was still guaranteed, but that the funding should be public. Gulyás said the only expectation is that newspapers are funded transparently, this is the objective of the Sovereignty Protection Office, and no action will be taken against anyone.

When asked by news portal 444.hu what he thinks freedom of the press means, the minister said that press workers can say and ask what they want. He said that the "anti-war action plan" would have no influence on media freedom this.

Gulyás added that he believes that only the journalist of 444 thinks that he did not tell the truth about the law on the protection of sovereignty six months ago. On the ban on 444 in Russia, he said, "I deplore the fact that 444 is banned anywhere", and he was not aware of any Hungarian government alone opposing the EU joint statement condemning it.

As of 25 June, Russia has blocked access to 81 European news services, categorised by country on the ministry’s website, with some listed as pan-European media.

“The Hungarian source was listed for systematically spreading inaccurate information about the special military operation in Ukraine. The confirmation of this can be found in several publications of 444,” the Russian Embassy in Budapest said on Telegram.

Nice place you got here. Be a shame if anything happened to it.

The government has also decided that every multinational company that made a profit on the war, according to the government will be obliged to pay a defence contribution. The new extra-profit tax will apply to banks and energy multinationals, as well.

Those banks will be penalised that have not increased their holdings of Hungarian government securities. Under the new measures, a levy will be imposed on banks' foreign exchange operations and the existing financial transaction tax (FTT) will also be raised.

In other words, the special taxes imposed on retailers, banks and energy companies will not be phased out.

At the same time, a freeze on retail bank account charges will be introduced to prevent financial institutions from passing on the new burden to customers.

It is not yet known how much the tax increase will be or when it will come into force. The move - and the desperate and deplorable argument behind it - was triggered by the need to get the budget in order. Fiscal adjustment may be needed this year and especially next year to meet the deficit targets. The state of the budget and the looming tax hikes are covered here:

Government expects nearly HUF 400 billion from defence contribution this year

The government expects to receive nearly HUF 400 billion in defence contributions this year, Gulyás said. These rules will apply from 1 August. The Ministry of National Economy has been negotiating with the multinationals on this, so today's announcement did not come as a surprise, he added.

Another threat for fuel retailers

Gulyás said the government is calling on energy companies to comply with the agreement (a unilateral mandate - ed.) reached with the government in April-May, according to which Hungarian families cannot pay more for fuel than the average price in neighbouring countries. Petrol and diesel were 4 and 10 forints more expensive respectively in Hungary than the average in neighbouring countries, so action is expected from traders, he added.

Interesting figures yet again. See link below for the 'numbers war' the government is currently waging against reality.

Flight delays and cancellations

Despite this being a busy and stressful period, all air transport operators will be expected to have an action plan and will be required to keep passengers informed so that significant delays are properly communicated to those affected, said Gulyás.

12 official procedures have already been launched between 24 June and 1 July to investigate delays in flight departures, and consumer protection fines may be imposed, he added.

The government expects authorities to impose painful fines for every significant delay,

said Gulyás, adding that the size of the fine should be a deterrent.

He noted that two thirds of the delays are caused by the airlines, the remaining one third is divided between four factors: weather, airport, air traffic control and ground handling.

According to the government, there are well-defined reasons for flight delays. They do not consider it a force majeure reason that the airlines cannot provide replacement aircraft in the event of a technical failure, but the companies cannot understandably blame weather factors, for example, Gergely Gulyás said.

According to him, they will decide on the imposition of consumer protection fines, and no one should expect conceptual procedures, as they always examine the circumstances and take decisions in the light of them.

Baby Loan terms change

Eszter Vitályos, government spokesperson, explained that the coronavirus pandemic has made many couples revise plans to start a family. In exchange for the preferential loan introduced on 1 July 2019, borrowers had to commit to having a child within five years. Now, the deadline has been extended.

For those that took out a Baby Loan in 2019 and 2020 will have until 1 July 2026 to have the child they had committed to have.

Compensation for the central bank loss

The government expects that there will be years when the central bank will make a profit, and the accumulated losses will be reimbursed from this, Gergely Gulyás said, adding that it would not be a problem if this happened within 8 years.

The National Bank of Hungary (MNB) made a loss for the third consecutive year, having closed 2023 with a loss of HUF 1,763 billion, so now, the institution's equity is negative for the first time, at minus HUF 1,855 billion. By law, the central bank must repay this within a "reasonable time".

Orbán admits he did not talk with Putin on behalf of the EU

Prime Minister Viktor Orbán visited Moscow in his capacity as Hungarian Prime Minister and as President-in-Office of the European Union, Gulyás said. (In fact, Orbán represents Hungary that holds the six-month rotating presidency of the Council of the European Union. - ed.)

This kind of admission comes after a tidal wave of condemnation from Orbán's fellow leaders (here's some more) for his visit to Moscow and meeting with Russian President Vladimir Putin last week.

Although Gulyás said in his new [temporary] office Orbán cannot not represent the EU, they do not claim that he negotiated on behalf of the EU. Nor did he have a mandate to do so.

When asked which major EU Member State supported Viktor Orbán in this rogue action, Gulyás replied that those are in the minority, but there have been statements of support, for example from the Slovakian Prime Minister.

Washington trip

After Beijing, Viktor Orbán is travelling to Washington. Gulyás said that the Prime Minister is going to the NATO summit, and that this is not part of his "peace mission", because in the peace mission it is worth meeting people who are interested in peace. Gulyás said, however, that this summit could also be used to promote Orbán's good cause, peace.

"Everything at the right time," Gulyás said of whether there will be a meeting between Orbán and Donald Trump whom Orbán has effectively endorsed for president in an interview and, on the eve of this week’s NATO summit, blasted the United States for having a “war policy” in Ukraine rather than a strategy for achieving peace.

Cover photo: Minister Gergely Gulyás, Head of the Prime Minister's Office, at the Government Info press conference at the Prime Minister's Office on 13 June 2024. Source: MTI Photo/Soós Lajos