Hungary’s government has softened its stance on the proposed introduction of a new internet tax. The levy sparked mass protests in Budapest and other urban centres around the country over the weekend.
The tax would have imposed a charge of 150 forints (just under 50 cent) for each gigabyte of internet traffic. Prime Minister Viktor Orban's government have since amended the tax, capping it at 700 forints (€2.27) for individuals and 5,000 forints (€16.21) for companies.
Protesters gathered in tens of thousands outside of the finance ministry in Budapest where they held their phones aloft to light up the square. Protesters saw the tax as an affront to free speech. Others argued that the move would have damaged the country’s competitiveness and have made the state an unappealing place for foreign companies to do business.
Those who opposed the tax estimated that it could have meant a charge of 11 cent per hour on Facebook and up to €14 to stream a film. Bloomberg suggests that these figures are overstated. They offer a more conservative estimate that an average Netflix user would be charged €19.60 a month. This is still a significant figure in a country where the average monthly salary is €533.
The European Union’s digital chief Neelie Kroes took to Twitter to register her disapproval, calling the proposed tax a “shame”. The US’s top diplomat in Hungary, M. Andre Goodfriend, attended Sunday’s street demonstration in Budapest.
Proposed internet tax in #Hungary is a shame: a shame for users and a shame on the Hungarian government. I do not support!
— Neelie Kroes (@NeelieKroesEU) October 22, 2014
Hungary has a flat line tax rate of only 16% but it also has the highest rate of VAT in the EU, amounting to 27% for most good and services.
The latest tax was in line with many policies introduced by PM Orban. He has already imposed extra taxes on banking, advertising, and telecommunications; these are all industries which are dominated by foreign companies.
A tax measure imposed on telecommunication companies has seen them pay tax for every voice call and text message. The government argued that an internet tax was justified as it compensated for losses as communication services moved online.
Originally posted 28/10/2014
