Menu
Justifying the price margin regulation taking effect on Monday, Mr Orbán said there have been a number of developments in the economy which should have caused prices to decrease as the Russo-Ukrainian war – thanks to the efforts of US President Donald Trump – is nearing its end, and the signs of peace approaching have emerged in the economy. He mentioned among these the forint-euro exchange rate, and the fall in the prices of gas and oil on the world market.
The Prime Minister said traders made a proposal regarding price reductions, but it was so minimal that it “fell far short of the government’s expectations, and of what the people would have been able to perceive,” and so they had no choice – the government had to intervene.
He added that Hungary was not walking alone in these shoes; four other countries in Europe have opted for the same solution as the Hungarians. There is an even more brutal form of intervention, should the profit margin regulation not lead to a satisfactory result; this, too, has been resorted to by a country or two on the continent, he argued.
Mr Orbán said, in the event of the application of price caps, traders have the possibility to shift the negative effects of price reductions onto processing or procurement companies, thereby reducing the price paid to Hungarian farmers. When they regulate the profit margin, the government says that “it doesn’t matter how much you paid for the goods, Dear Trader, the profit margin that you put on top of your procurement price cannot be more than 10 per cent. This includes your costs, and also your profit.’ This way, the effect cannot be passed on, pushed back onto producers, and as a result, Hungarian farmers will not find themselves worse off, he added.
In summary, he said that if they are compelled to introduce price caps, traders can pass on the negative effects further down the chain, but price caps are a better guarantee for keeping prices down; “we’re still only in the middle phase.”
He said reviewing the entire product range, the Ministry for the National Economy identified 30 basic foodstuffs to come under the effect of the profit margin cap. “I think this smells of life, meaning that this is what reality more or less looks like. These are the thirty products that pensioners and families buy the most of,” he added.
Mr Orbán said already now he can see the effect of the profit margin cap, there are a great many promotions, while from Monday, this will come across even more clearly. He observed that “we’re Hungarians,” everyone has an idea about how to respond to one government measure or another, and so traders will figure something out, but “we will respond to that.” “For the time being, let’s not get ahead of ourselves.”
In answer to the suggestion that, according to critics, the profit margin cap could even further increase inflation if shops decide to make up for the profit lost due to the profit margin cap on other products, the Prime Minister said if the government extends this measure to all foodstuffs, that will be impossible.
Regarding the personal income tax exemption for mothers under the age of 30 years, the Prime Minister highlighted that the government was building a family career model under which young working people over the age of 18 years – regardless of whether they are boys or girls – did not pay personal income tax until the age of 25 years. If they are girls and decide to have children, they will not pay personal income tax until the age of 30 years. If they decide to have two children, from then on they will not pay any personal income tax until the end of their lives, he stated.
This is a very large sum of money from the budget’s point of view. Therefore, they have already introduced some elements of the model, while other elements will be introduced by the government gradually, one after the other, he added, mentioning as an example the introduction of personal income tax exemption for mothers of two under the age of 40 years from 1 January. They will be followed by mothers between the ages of 40 and 50 years in the following year, women between the ages of 50 and 60 years the year thereafter, and so on.
Over and above all this, he added, there is also a family tax benefit which fathers, too, can avail themselves of in relation to minor children.
The Prime Minister said the government is convinced that the origo of, the key to the births and raising of children is whether mothers feel safe. It would be best if mothers “could rely on healthy, strong, working men, capable of earning a good living.” But – the Prime Minister believes – there is a fear in mothers’ heads about what will happen if they do not find such a man or if their lives take such a turn that they are left on their own, and all of a sudden, they find themselves left with all the troubles and financial burdens of raising children.
Therefore, they are working to provide help for mothers so that they feel safe, are able to decide to have children and to dedicate a part of their lives to raising them, he said.
Mr Orbán recalled that governments in western civilisation tended to see the income tax as a matter for the individual, a personal matter. By contrast, in the past 15 years, Hungarian economic policy has been driven by the belief that this does not correspond to reality: people do not live alone, the vast majority of them live in families, he observed.
Therefore, the Hungarian government has attempted to render the concept of living in a family the basis of the system of taxation; this is how they got so far – with many long years’ work – as to now being able to introduce the most significant measure, the lifelong tax exemption provided for mothers. With this, an economic system is coming into being in Hungary like nowhere else, this is a unique family-centred economic system, he indicated.
He highlighted that the decision to have children was not just a personal matter, but was also key from the viewpoint of our national community. This is why it is important that those who decide to have children should not find themselves any worse off financially than those who do not.
In his view, today the situation is much better than it was before, but we are not there yet. We will need a few more years, and if the whole family career model becomes established, then we will be very close to being able to say that already in the short term, those who raise children are not any worse off financially, he laid down.
He said there is no question that in the longer term living in a family not only makes you happier, but is also more advantageous financially. However, many long years pass before a family reaches that stage, and this is why they need the family career model that the government is now offering them, he observed.
He also said when the government regards 2025 as a year of breakthrough, it put its bets on peace, meaning that after the changes in the United States, not only Hungary, but also the Americans will stand on the side of peace. Therefore the world will shift in the direction of peace which will have positive economic impacts. This is what they calculated with in their fiscal policy and economic plans, this is what creates the opportunity for an economic breakthrough, Mr Orbán stated.
Now, when we are in the process of such a breakthrough, favourable and unfavourable processes emerge all at once because there are still negative things lingering on from the period before the year of breakthrough, but good things – which are happening due to the new measures – have also emerged on the horizon, he pointed out.
He highlighted, however, that in addition to the family career model, the government had also announced programmes in the economy for small and medium-sized businesses, the programme for the construction of one hundred factories as well as the broadening of access to housing and home creation.
Good signs, good news will be forthcoming one after the other which will supplant the bad news left over from the war times. And the percentages will change with every passing day, the bad things left over from the war times will eventually disappear, and the good news, the good conditions, the good opportunities generated by our economic programme will prevail in the economy, he said, stating his expectations for 2025.
The Prime Minister also spoke about the opinion vote on Ukraine’s EU accession. According to his information, the government decided on the technical details, but they have not yet worded the question itself; they assigned this job to the competent minister.
“Everyone has already seen national consultations, this is the same, with the difference that this time, we will ask for the people’s opinion not on ten or so issues, but on a single issue. It will be simple, as easy as pie,” he said.
Ukraine’s EU membership would destroy the Hungarian economy, the Prime Minister stated.
He stressed that the Brussels leaders wanted to admit the neighbouring state within a year or two.
He said, other than Hungary, all other members of the EU support the continuation of the war as there still is a pro-war majority in Brussels. European leaders have decided that Ukraine should fight, Ukraine must keep on fighting, in return for which they will receive expedited membership. But this will destroy us, the Prime Minister said, stressing that the consequences of the accession of Ukraine as a neighbouring country are much more evident, direct and faster for us.
Mr Orbán emphasised that according to the EU treaties, all members must support the admission of a new state, and so on this issue “Hungary has a decisive say.”
He highlighted that upon deliberating this question, the Hungarians must also take into consideration economic, labour market, public security, border protection and military criteria as well as issues concerning the future of health care.
He said Ukraine “would only take money away from us,” while “Serbia could be admitted tomorrow morning; that – rather than causing us to sustain losses – would result in enormous economic benefits for the whole of the European Union, but for Hungary especially because we’re neighbouring countries.”
He added that North Macedonia and Montenegro were in a similar position: their accession would have enormous benefits for Hungary, and would broaden our economic opportunities extremely.
It is for a reason that Hungary is an ardent supporter of the admission of the Balkans states, the Prime Minister observed.
Mr Orbán stressed that it was a crazy idea that EU Member States should spend a part of their GDP on supporting Ukraine, given that “the future of Europe cannot be decided on the battlefield as there, there is no solution of any kind, that can only be decided at the negotiating tables, “ and so we must aim for peace and negotiations.
He observed that in Brussels, there was a division along party lines regarding who stood for peace and who stood for war. The parties DK (Democratic Coalition) and Tisza are both “pro-war,” while Fidesz is on the pro-peace side.
The Prime Minister said he expects a very intense and difficult debate at next week’s EU summit where the development of Europe’s defence capabilities will be one of the key issues, including how this project should be financed.
He mentioned that according to one camp, the bill should be footed from the Member States’ own budgets, while the other camp would finance it from “enormous giga loans” to be guaranteed by the European Union. Mr Orbán added that the Hungarian Constitution only permitted the latter if approved by a two-thirds parliamentary majority.
“Before Thursday’s European summit, Parliament will have to say something about this in order for me to have a mandate to stand for one position or the other,” he said.
“I will argue for Hungary not consenting to the Member States of the European Union taking out loans together, to becoming indebted, and to indebting not only our children, but also our grandchildren. Hungary must not take part in this,” the Prime Minister stated.
He added that we must take part in common defence and a common defence policy, and we must also spend money on it, “but we mustn’t do that under any circumstances from a collective loan.”
More news
