Hungary EcoMin makes shocking statement on sectoral taxes

He cited the telecoms tax as an example, saying that despite its abolition there had been significant price increases.

I remind you that anyone who argues that if we phase out a tax, it will be good for consumers is delusional. So if someone says that if we reduce the retail tax, the price of food will go down, that's a pipe dream,

he said.

Márton Nagy also used the telecoms sector as an example, as negotiations have begun between the companies and the ministry.

It is well known that after the retail sector and banks, telecom services have also been targeted by the government in the name of anti-inflationary measures: telecom operators are expected to 'voluntarily' lower their tariffs.

Nagy announced on Monday that he would announce the exact extent of the cuts with the service providers concerned on Wednesday.

Specific proposals from service providers should be received within two weeks from now,

he said, adding that these prices should be reduced by at least 10%.

Inflation-linked hikes

In recent years, telecom operators have increased their subscription fees each year by almost the official inflation rate of the previous year.

In 2022, domestic telecoms companies faced a significant increase in costs as inflation soared to double-digit levels not seen since the late 1990s.

In a tight labour market, the rise in labour costs has been compounded by the surge in energy prices due to the outbreak of the Russian-Ukrainian war, to which telecoms companies are sensitive as energy costs are a major burden on operations.

In the meantime, they have also been burdened with billions of forints in the so-called extra-profit tax and the telecom tax. In this context, the telecom companies decided to introduce annual tariff increases linked to inflation.

What will happen to the retail tax?

Retail sales tax has also been a long-standing issue, especially since the margin cap came into effect (17 March), as companies have to pay the taxes out of their margins, which have been capped at 10% by the government.

Cover image (for illustration purposes only): Portfolio