Hungary Plans to Tax Internet Use with Levy on Service Providers

By Margit Feher 
 

BUDAPEST--Hungary plans to tax internet use, beginning next year, by levying a special tax on internet service providers to raise budget revenues.

The measure would be the latest in a series of extraordinary taxes the Fidesz-party government has introduced since coming into power in 2010.

The move will be an extension of Hungary's already existing telecom-sector tax since "most of the phone calls and text messages are done these days via the internet versus the traditional telephone lines," Economy Minister Mihaly Varga said at a news conference on Tuesday.

At present, Hungary has an extraordinary tax levied on each minute of a phone call and every text message, with a monthly cap on the tax's amount per customer.

The new tax will be 150 Hungarian forints ($0.62) on every started gigabyte of data, reads the draft 2015 tax bill, which the economy ministry submitted to parliament on Tuesday, before submitting the draft 2015 budget bill to parliament by Oct. 31.

Hungary's biggest internet service providers include its three mobile operators: Norway's Telenor ASA (TEL.OS), U.K.'s Vodafone Group PLC (VOD), and Telekom, an arm of Magyar Telekom Nyrt. (MTELEKOM.BU), majority-owned by Germany's Deutsche Telekom AG (DTE.XE), as well as UPC, owned by U.S. cable group Liberty Global (LBTYA).

Also beginning next year, telecommunications companies may deduct their corporate tax from the special telecom-sector and internet-data-traffic tax, the draft bill adds.

Parliamentary approval of the new levy is likely since Fidesz has a two-third majority in parliament after it won a consecutive second term in power in general elections in April.

To express disapproval of the government's plan, several Facebook pages started Tuesday night to organize street demonstrations for Sunday. Various Facebook users have said the new levy would limit access to the internet and thus hamper the freedom of expression.

The budget revenue the government expects to collect from the new levy could exceed 20 billion forints a year, Peter Beno Banai, a state secretary at the economy ministry, told Hungarian online news agency Mfor on Tuesday.

Based on Hungary's international internet traffic data, which only covers part of the country's data traffic, fellow Hungarian news portal Index has estimated that the budget revenue could total as much as 95 billion forints a year.

In comparison, Hungarian internet providers' combined revenue totaled 164.4 billion forints in 2013, according to figures from the Hungarian statistics office.

Write to Margit Feher at [e-mail]