Budapest mayor calls on Hungarian government to cap fuel prices for public transport

Budapest mayor calls on Hungarian government to cap fuel prices for public transport

The country’s government instituted a fuel price cap last year

In November 2021, the Hungarian government instituted a fuel price caplimiting gasoline sales to 1.28 euros (480 Hungarian forints) per liter to limit the damage of the energy crisis. However, with the outbreak of the war in ukrainethe government decided to extend the cap and protect consumers.

However, several key modes of transportation were not addressed in the bill, Gergely Karacsony, Mayor of Budapest highlighted on social media last week. In fact, he went further by explaining that The government of Victor Orban deliberately targets public transport as a means of punishing the capital.

This prompted Mayor Karácsony to write an official letter asking the government to extend the price cap to public transport, failing which local government budgets would suffer a serious blow.

A ceiling price, but not for everyone

Hungary applied price caps this year to mitigate the fallout from the European energy crisis. At the beginning of February, they instituted the first price cap and it was aimed at essential food products. Orban’s government has extended caps already in place on the price of energy, fuel and mortgages.

The fuel price cap, in particular, covers Hungarian vehicles under 7.5 tons and foreign vehicles under 3.5 tons. The distinction between foreign and domestic cars, according to Gergely Gulyás, Hungarian Minister in the Prime Minister’s Office, was made to discourage oil tourism.

However, the bill does little to help gas stations and logistics companies, some of which are forced to supply fuel at a loss. Notably, the government then decided to reduce the value added tax for fuel sales in an attempt to calm the situation.

Punish public transport

The issue of public transport in Budapest has caused quite a bit of controversy over the past six months, as Mayor Gergely Karácsony pointed out in November. At the time, he said, the government was responsible for withholding certain funds.

The move sparked fears in the city administration that due to the loss of ticket sales during the lockdown period, public transport could face closure. Then as now, Mayor Karácsony claimed that the government was punishing the citizens of Budapest as a political gesture.

Currently, public transport in the city does not fit the bill to benefit from the cheaper fuel. As a result, the vehicle fleet has to refuel at market prices, which puts a further strain on the municipal budget, while the State would benefit from a 27% increase in tax revenue. This is why the mayor asked the government to extend the cap to public buses.

Karacsony continued: “While everyone would benefit from as many people as possible using public transport, the government continues to punish the sector.”

Laura T. Thrasher