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2nd Mar 2024

EU commission lashes out at Hungary's internet tax plan

  • Orban (r): Around 100,000 people in Budapest also demonstrated against the internet tax proposal (Photo: ec.europa.eu)

The European Commission on Tuesday (28 October) lashed out at Hungary’s proposal to introduce the world’s first Internet tax.

EU digital spokesperson Ryan Heath said Hungary’s data traffic tax is part of a larger pattern by Viktor Orban’s government of rolling back freedoms.

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"It's part of a pattern ... of actions which have limited freedoms or sought to take rents without achieving a wider economic or social interest,” he said.

He also warned it could upset growth at an EU-wide level by creating a precedent if other member states decide to implement similar rules.

Heath then accused Orban's centre-right Fidesz government of manipulating the proposal in the hope that protests, complaints, and people’s concerns fade away.

“The method that the Hungarian government tends to use in taxes or in laws like this is that they announce a very, very tough version, they wait for the initial reaction which is very negative, and then they appear to moderate the action by polishing it a little bit,” he said.

The amended 2015 tax code was submitted last week to a Hungarian parliament dominated by Orban supporters.

It proposed imposing a 150 forint tax (€0.50) per every gigabyte of data transferred.

This was later changed to a monthly cap of 700 forints (€2.3) for private users and 5,000 forints (€16) for businesses to be paid by Internet Service Providers.

But Orban’s supposed appeasement strategy seems to have backfired.

Protests swelled in Budapest when marchers took to the streets on Tuesday evening for a second demonstration, which drew around 100,000 people.

"I doubt the Internet companies won't build this tax into their prices,” one protestor told Reuters.

The first rally against the tax hike was on Sunday and it drew a crowd of 10,000.

Other protestors say the tax is more symbolic of a government that is shifting away from democratic principles and becoming more authoritarian, noting that the US recently barred six top Hungarian officials from entering the US.

Tuesday’s rally is also the biggest protest against the government since Orban took office as prime minister in 2010.

The government argues the tax is needed because people are shifting away from already-taxed telephones and text messages towards the Internet as a primary means of communication.

It denies there is an anti-democratic agenda behind the bill.

Critics say the bill’s initial proposal to impose a tax on data transfer is misguided because governments cannot predict the evolution of data growth.

Others pointed out that the tax-per-gigabyte total would have been more than the sector’s annual revenue.

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