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Banking Assoc Delivers Negative Assessment of Gov't Measures

Banking

Photo by Singkham / Shutterstock.com

The Hungarian Banking Association warned that a government measure to extend the windfall profit tax on lenders to 2024, while allowing lower payments in exchange for buying more government securities, would reduce banking sector liquidity and cut outlays for corporate investments, according to a report by state news wire MTI.

The measure, issued in a decree late Wednesday, will have an "unfavorable impact" on the Hungarian economy and "weaken its resilience", the association said.

The association also said another government measure introducing a 13% social contribution on investment gains, on top of the 15% interest tax, would be a "big step backward" in household self-care.

The measure, outlined in a separate decree issued on Wednesday and in effect from July 1, would exempt returns on government securities and real estate investment fund units from the social contribution.

The banking association complained that the measure "distorts competition" and would "squeeze out" the Hungarian financial sector from the market for savings.

The association asked the government to review the measures and, "if possible, repeal them".

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