According to Bloomberg, citing Victor Orban, Hungary Prime Minister, the special banking tax could be eliminated as of 2013. At the same time he has added that budget revenues from the new transaction tax could be higher than currently anticipated.
Hungarian Prime Minister Viktor Orban said the country’s planned financial transaction tax was intended to be permanent and could replace the extraordinary bank tax earlier than expected. Orban told executives at the Austrian Chamber of Commerce in Vienna that the country may completely scrap a bank tax from the start of next year because revenue from the transaction tax may be “huge.” The planned tax on bank transfers will remain in force permanently, he said. Hungary expects the tax to yield 130 bln. forint (438 mln. EUR) a year in revenue, which will affect corporate and household bank transfers and be levied at a rate of 0.1 %, according to the draft. /POSITIVE for ERSTE as the levy on financial transaction has just been announced earlier, the expected tax yield per year on a lower range of previous government expectations of 130-230 bln. HUF and we see possible scrap of Bank Levy from 2013 positively. /
The picture is mixed, while the scrap of entire special bank tax is positive, it is difficult to assess the impact of higher than currently expected transaction tax. Currently transaction tax is expected to bring annual budget revenue of between HUF 130bn and HUF 228bn versus HUF 200bn from special banking tax, which is expected to be halved in 2013, before being eliminated in 2014. We expect initial positive market reaction, however it could be muted by uncertainties regarding scope of increase in expected revenues from transaction tax.