Hungary's PM Unveils Support Package for Restaurants and Heating Costs

Government Support Measures for Economy

BUDAPEST, Jan 21 (Reuters) - Hungary's government announced on Wednesday a 100 billion forint ($300 million) package to shore up the restaurant industry and said that it would cover extra heating costs for households in January.

Support for Restaurants

Prime Minister Viktor Orban's government announced the measures as the veteran leader faces an uphill battle to revive the economy ahead of an April election. His right-wing Fidesz trails opposition challenger Tisza based on most recent surveys.

Heating Cost Assistance

An autumn Eurobarometer survey showed the rising cost of living topped Hungarians' domestic concerns - despite inflation retreating from highs above 25% in early 2023 to the central bank's 2% to 4% tolerance band in November.

Tax Cuts and Subsidies

Orban's government would provide liquidity support to restaurants, halve a tourism tax and waive a levy on entertainment spending for companies worth up to 1% of their annual turnover, financial news website portfolio.hu reported, citing Economy Minister Marton Nagy at a briefing.

Nearly 10,000 restaurants would also be allowed to treat up to a fifth of their revenue as a service fee, reducing their tax bill.

Later in the day, Orban said the government was going to pay the extra cost facing households in their heating bills due to freezing temperatures in January.

It was not immediately clear how the measure would affect the existing state subsidy scheme that has been in effect for households' gas and electricity consumption.

Caps on gas and electricity bills have been a key plank of Orban's policies but the costs surged in 2022 and forced the government to abandon it for high-usage households.

Earlier, Orban had also announced large-scale tax cuts for families, wage hikes, food vouchers for pensioners, a pension top-up to be paid in February and a subsidised housing loan programme to shore up his support. 

Fitch Ratings late last year cut Hungary's outlook to negative on Orban's pre-election spending initiatives.

($1 = 328.49 forints)

(Reporting by Gergely Szakacs; Editing by Kate Mayberry)