Internet tax

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2014: Attempted Internet tax in Hungary

In October 2014, it became known that Hungary could become the first country in the world with taxable Internet traffic. To charge money from providers for each gigabyte of transmitted information is offered by the Minister of Economy of the country Mihaly Varga.

The bill was submitted to the Hungarian Parliament on 21 October 2014. According to Varga, the development of communication technologies has changed the approach to the use of communication services, so changes in the tax code are needed. However, the introduction of an Internet tax may lead to an increase in the price of this service.

Risks to providers

According to the bill, for every 1 gigabyte of web traffic passed through the provider's network, he will have to pay 150 forints ($0.62). Mihai Varga is confident that this initiative will make it possible to annually replenish the state budget by 20 billion forints (about $83 million).

The consulting company eNet estimates the amount of deductions under the new tax at 175 billion HUF ($727 million) per year. This amount could take place in 2013, when the volume of fixed Internet traffic in the country amounted to 1.15 billion gigabytes, the volume of mobile - 18 million gigabytes. The activity of Internet users is growing, which means that the revenue of the treasury (by 200 billion HUF and higher) from the activities of telecom operators may also increase, experts say.

Internet tax could cost Hungarian providers several hundred million dollars

According to the Hungarian Central Statistics Office, the volume of the local Internet services market amounted to 164 billion HUF ($681 million) in 2013.

Protests against the Internet tax

Europe's reaction to the proposed introduction of an Internet tax turned out to be negative. Neelie Kroes, vice president of technology at the European Commission, believes that the initiative will lead to an increase in the cost of Internet tariffs, which will adversely affect the development of the digital economy of Hungary, which is already lagging behind other eurozone countries in the use of the Internet and the spread of broadband access (broadband).

Magyar Telekom, the country's largest telecommunications operator, says that additional taxation of Internet providers will increase their total costs by about 100 billion forints ($415 million), and also "paralyze" the development of the broadband access market.

A few hours after the Internet tax bill was introduced, about 100 thousand Facebook users joined a group protesting against this initiative. Mass protests are already being prepared on the streets of Hungary.

Authorities refused to introduce an Internet tax

The initiative of the Hungarian authorities regarding the introduction of an Internet tax caused a wave of protests, which took place at the end of October 2014. According to various sources, from 40 to 100 thousand residents of Budapest participated in the rallies.

According to protesters, the taxation of Internet traffic is more an attempt by the government to take control of the local segment of the World Wide Web than a good intention aimed at strengthening the state budget.^[1]

The first demonstration was held on October 26, 2014. Its participants threw old computer mice and keyboards at the headquarters of the ruling Fides party. The government responded to the protest with a statement about reducing the tax rate. It was assumed that individuals will have to pay 700 forints per month ($2.9) regardless of the volume of web traffic, legal - 5,000 forints ($20.6). However, Hungarian dissatisfied with the regime again took to the streets.

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Tens of thousands of Hungarian residents took to the streets to express their dissatisfaction with the introduction of an Internet tax

After the second wave of anti-government protests, the authorities decided to abolish the introduction of an Internet tax. Via state radio, Hungarian Prime Minister Viktor Orban stated the following:

"Despite all the aspirations of the authorities, this tax simply cannot be introduced. We want to make decisions with the people. The government wanted to expand the telecommunications tax, and the population perceived it as an Internet tax. People question any taxes. "

The prime minister added that in its current form, the bill on taxing the Internet cannot be adopted, but in 2015 the initiative will be revised.

According to Political Capital analyst Peter Kreko, the invented tax did not find support even among supporters of the current regime. The opposition socialist party in Hungary believes that Orban will not abandon the idea of ​ ​ taxing the Internet and will try to introduce this law under a different name and content.