Balázs Orbán, the prime minister's political director, explained a study in a Facebook post, justifying the need to introduce the extra-profit special tax and also discussed the expected inflation-reducing effect of the measure.
"The special extra-profit tax announced by the government is an effective tool for reducing inflation - this is also supported by the Economic Policy Institute's study at the end of April.
One of the main causes of high inflation is the high profit margin of large companies, for which the study cites the economic situation caused by the pandemic as an example. As a result of the epidemic and the closures, the demand for certain products and services skyrocketed, so large companies with sufficient inventory had enormous price-setting power over their customers.
The same thing is happening now because of the protracted war and the Brussels sanctions. Multinational companies are significantly raising their prices , as inventory shortages have occurred in some sectors, primarily the energy sector.
A study by the Economic Policy Institute recommends the imposition of a temporary extra-profit special tax introduced by the government in order to curb corporate greed and inflation! It can offset the companies' pricing power, thus mitigating the price increase.
The special tax imposed by the government therefore prevents banks and multinational companies from profiting from the war conflict, while the people pay the price.”
Source: Facebook
(Cover photo: Origo/Sándor Csudai)
