VOSZ: the increase in prices is not caused by the hunger for profit of Hungarian enterprises

(Photo: Pixabay)

According to the VOSZ, the profitability of domestic companies probably did not increase more compared to previous periods, nor compared to European average values, and in many cases it may have remained below them. The association emphasized that gross operating profit (GEO) rose by almost 34 percent in the third quarter of 2022, but this figure alone tells very little about corporate profits or the benefits of owners. The BME indicates how much value remains with company owners before taxation, but at the same time, taxes, such as production, corporate and special taxes, also reduce company profits. The results of financial operations, amortization, and corporate taxes do not appear in the gross operating result either – the VOSZ pointed out.

In 2021, domestic companies were charged about HUF 860 billion in corporate taxes

This amount could even double in 2022, because more tax rates than special taxes increased, and the extra profit tax appeared last summer, and the price level also increased. In 2023, the government expects a 35 percent higher income from corporate tax alone, pharmaceutical manufacturers received a new tax worth 122.5 billion, the energy sector can pay 512 billion more, the association indicated. According to the organization, since the Hungarian economy is open, the devaluation of the forint matters significantly in the result, especially in industry and transport. Looking at the gross operating result in euros, the increase was 17.2 percent instead of 33.7 percent measured in forints, which is a completely average value in the EU. Eliminating the base effect and looking at the growth comparing the second and third quarters of 2022, the result in euros is only 3.2 percent in Hungary, lower than the EU average – pointed out the VOSZ.

These sectors are not the cause of the increase in prices

According to the association’s summary, the outstanding pre-tax results of the sectors that have the most direct impact on consumer prices – trade, tourism, hospitality, transport – can be explained by cost growth, the base effect or individual factors, and together with these, the performance of none of the sectors is exceptionally high compared to inflation. The BME ratio expected in the given economic environment has not changed for Hungarian companies, the BME ratio for the third quarter of 2022 fits into the trend of recent years, and the Hungarian result is not striking even in EU comparisons. The companies continued to strive to comply with their business plans, thereby maintaining their economy and keeping jobs, VOSZ wrote.

MTI