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Hungarian government to tax the internet by 122 percent

by on23 October 2014



Political face palm of the 21st century

Hungarian politicians have decided that a neat way to raise cash is to tax internet traffic so that all its revenue goes to the government. A draft 2015 tax bill submitted to parliament late is pretty clearly a death warrant for Internet and telecoms providers and their customers throw Hungarian economy into the dark ages – but it will raise money right?

The draft tax code contains a provision for Internet providers to pay a tax of 40 cents per gigabyte of data traffic. To stop corporates screaming blue murder about the move they will be allowed to offset corporate income tax. The maths of the idea is interesting eNet partner Gergely Kis told Reuters, the tax could hit Internet providers by more than $0.82 billion. However the the entire internet service sector's annual revenue came to $0.67 billion at the end of 2013. So the tax basically involves ISPs giving all their money to the government and an extra 22 per cent for good measure.

Within hours of the tax provision being published over 100,000 people joined a Facebook group protesting the levy, which they fear providers will pass on to them. Thousands said they would rally against the tax, which they said was excessive, outside the Economy Ministry on Sunday.

Hungarian Prime Minister Viktor Orban is a big fan of taxes. He has imposed special taxes on the banking, retail and energy sectors as well as on telecommunications providers to keep the budget deficit in check. As a result, profits in some sectors of the economy have slumped and international investment has plummeted.

Economy Minister Mihaly Varga said that communications technology has changed the way people use telecom services and therefore the tax code needed to be changed. His ministry said it expects the tax to generate annual revenue. But it will be good for the country right? Well unfortunately Hungarian government corruption is pretty grim, so chances are that the taxes will end up in some politician’s back pocket. Still they might complain when they don’t have an internet to download their porn like other country’s politicians do.

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