fuel is not expensive in Hungary because of taxes

As Világgazdaság also reported, wholesalers announced on Monday that the price of fuel will change from Wednesday. You can see a kind of leniency on their part, since in one step they cut the price of diesel by HUF 8 per liter, but they have not yet touched the price of gasoline.

The question is whether the current step, as well as the one due on Wednesday, will be enough for the government to refrain from intervening in the fuel market. Because Márton Nagy announced this. The Minister of National Economy said last Friday that the government will examine whether there is anything to be done on Wednesday, because domestic fuel prices are HUF 20-30 higher than the EU average.

All this came to light when the Central Statistical Office published a regional comparison of fuel prices. This established that in Hungary

• the average price of 95-octane motor gasoline was HUF 640, while in regional countries it was HUF 620, which means a 3.2 percent surcharge for domestic drivers.
• The average weekly price of diesel in Hungary was HUF 654, which was HUF 31 or 5 percent higher than the regional average price of HUF 623.

The overall picture of the latter improved somewhat with the recent HUF 8 correction, but there is still plenty to improve. Márton Nagy did not rule out the possibility of a gasoline price freeze either, but he immediately indicated that there are countless intervention options at their disposal, including maximizing the margin.

In connection with this, a debate immediately broke out about why fuel is expensive in Hungary. The actors of the fuel market logically pointed out that the reasons are to be found in the tax burden imposed on fuels:

• in the 27 percent VAT,
• HUF 152.5 (gasoline) and HUF 142.9 (diesel) in excise tax per liter,
• in the energy efficiency contribution, which is HUF 8.5 per liter,
• and in the retail sales tax, which applies differently to gas stations.

Based on this, the impression may indeed be formed in the consumer that the pricing of the charging stations essentially depends on the tax policy. But the whole picture includes that

1. traders carefully conceal the extent of the wholesale and retail margin,
2. 35-36 percent of the price per liter is the price charged by the producer.

So these are also striking items, and now the finance minister is also denying, based on EU statistics, that the tax levied by the state is high. Mihály Varga also brought up this issue in the April 11 government briefing. At the time, he stated that the length of the tax was not responsible for the fact that fuel in Hungary is more expensive than fuel in the region. “If we look at the net prices without tax, the price of Hungarian fuel is completely in the middle. So I think that taxes should not be dealt with in this regard, but the production cost should be reduced to such an extent that the prices can go down.”

And he recently published a table on his social media page, which shows that the prices of fuels in Hungary are one of the lowest (at least gasoline – the ed.) tax burden in the European Union. “High fuel prices are not caused by taxes,” underlined the Minister of Finance.

Indeed, it can be read that the rate of tax burden on 95 gasoline is 46 percent in Hungary, while

• In Finland it is 56 percent, as well as in Greece, Ireland, Malta and Italy.
• In the Netherlands and Germany, the same 55 percent,
• 53 in Denmark,
• 52 in Austria, Belgium, France and Slovenia.
• It is followed by Portugal and Latvia with 51 and 50 percent.
• 49 percent in the Czech Republic, Estonia, Sweden and Slovakia,
• 48 in Croatia and Luxembourg,
• 47 in Lithuania,
• 46 in Poland, Spain and Hungary.
• A lower tax level is only in Cyprus (44 percent),
• It is valid in Bulgaria and Romania (43 percent).

Whether the ranking is similar in the case of diesel was not clear from the Finance Minister’s post.