Gergely Gulyas – Photo: MTI

Gulyas: Government limits price caps on gas and electricity

Hungary's government has declared a state of energy emergency and has approved seven measures that will include limiting the price caps on gas and electricity to average consumption levels from August 1, the prime minister's chief of staff said on Wednesday.

The protracted war in Ukraine and the sanctions imposed by Brussels on Russia have led to a dramatic increase in energy prices throughout Europe, causing an energy crisis in a large part of the continent, Gergely Gulyas told a regular press briefing.

It has also become clear in the recent months that as things stand, Europe will most likely not have enough gas for the autumn and winter heating season, he said.

Therefore, in the interest of protecting Hungarian families and the economy’s energy supply, the government has followed the example of several other European countries and has declared a state of energy emergency, Gulyas said. It has also approved a plan of seven measures that will enter into effect in August, he added.

Gulyas said the measures would ensure that the country has enough energy in the winter and that the scheme to cap utility bills can be upheld.

By changing the rules of the small business tax (kata) the government has eliminated an opportunity for taxpayers to “bypass the original aim” of the kata system, Gulyas said, adding that the kata tax, introduced in 2012, was aimed at offering a flat tax to small local service providers. Ninety percent of the first 100,000 kata taxpayers were such entrepreneurs, but now two-thirds of kata payers receive income from companies rather than being employed, he insisted.

Gulyas called it “unacceptable” that while people in the kata system paid a flat tax of 50,000 forints (EUR 122) a month, a hospital nurse paid a monthly 184,000 forints in taxes.

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