Hungary's windfall tax on airlines could stay in place beyond two years

Hungary’s government could keep its new windfall tax levied on the airline industry beyond its currently planned two-year lifetime, Economic Development Minister Marton Nagy said on Monday. The 30b forint ($78.95m) per year tax, levied from July as part of nationalist Prime Minister Viktor Orban’s moves to rein in the budget deficit, has drawn criticism from Ryanair and rival Wizz Air. Orban’s government announced new windfall taxes worth 800b forints on “extra profits” earned by banks, energy companies and other firms last month, hitting Budapest stocks and rattling investors. The taxes are needed to plug budget holes created in part by a pre-election spending spree that helped Orban stay in power and the surging costs of keeping a lid on retail energy bills. The levy on the airline sector involves a tax worth 10 to 25 euros on passengers departing Hungary from July, criticised by airlines for imposing a new burden on a sector that has yet to fully recover from the coronavirus pandemic. “We could call this something else after two years and keep it in the system,” Nagy said, adding that longer-term fate of the levy would depend on the shape of the Hungarian state budget and that of the airline industry. Re-elected for a fourth successive term in an April landslide, Orban is facing his toughest economic challenge to date with inflation surging despite price caps on fuel, some basic foods and mortgages.<br/>