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Gov't Raises Refineries Tax

Government

Hungary's government has raised the rate of a tax on the spread between Russian crude and Brent for refining businesses from 40% to 95% in a decree published in the latest issue of the official gazette, Magyar Közlöny.

The government rolled out the windfall profit tax in June, initially with a rate of 25%, but raised that to 40% later in the summer, after a price cap on motor fuel prices was restricted to vehicles owned by private individuals.

On Tuesday, the government scrapped that 480/liter price cap altogether amid a surge in demand as sanctions affecting Russian crude came into force. 

Prime Minister Viktor Orbán had flagged the tax hike in a post on Facebook on Wednesday. He said the consequences of the European Union's price cap on Russian crude, introduced December 5, were "expected" and that the government would take windfall profits resulting from a "sanctions surcharge" on motor fuel and channel them into a fund established to protect regulated household energy prices.

"From now on, the sanctions surcharge on petrol prices is in force across all of Europe. In Hungary, we will rechannel the resulting extra profit into the utility prices defense fund," he said.

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