Hungary’s Internet tax postponed but not yet abolished

By EDRi · November 5, 2014

On 28 October about 100,000 Hungarians gathered to protest a planned introduction of a tax on Internet data transfers. The new tax would have required Internet Service Providers (ISPs) to pay 150 forints (0,48 euro) per gigabyte of data traffic. According to the Hungarian government’s proposal, the intended tax was meant solely for ISPs. However, it would have directly affected Internet users, making Hungary the only country in the world where the fundamental freedoms facilitated by the Internet would become “pay as you go”. The intended tax would have curtailed citizens’ freedom of expression and access to information and stifled the functioning of civil society.

The plans to introduce the Internet tax provoked strong opposition not only locally, but also on the European level. Ryan Heath, the spokesperson of Neelie Kroes, who was then the European Commission’s Vice President for Digital Agenda, made a statement on behalf of Ms Kroes, supporting the protests and highlighting that Internet is a common global resource and the tax proposed by the Hungarian government is “bad in principle” and needs to be tackled on the EU level. Neelie Kroes herself tweeted,describing the situation as a “shame on the Hungarian government”.

Many Hungarian politicians expressed their strong support to the plan. MEP József Szájer, Vice President of the European People’s Party said on Hungarian radio that he believed that a government that introduces a tax on Internet usage demonstrates courage “What we’ve been hearing about the Internet tax over the past few days – that it’s an attack on the Internet – is stupidity: it’s like saying not getting free food is an attack on the freedom to eat.” Ironically, the incremental cost per gigabyte of internet traffic in Hungary has been calculated at 5200% of the cost in Finland, so the notion that Hungarians are complaining about not having free internet access misses the point by quite a long way.

On 31 October, having first backtracked to remove the metering element of the plan, Hungarian Prime Minister Viktor Orbán stated that the Internet tax will be withdrawn entirely. However, discussions over a variety of Internet issues are yet to follow, as the huge deficit in the country’s budget remains a concern. Orbán stated that the discussions over Internet regulation and taxation would begin in early 2015 in the form of a “national consultation”. According to the Prime Minister the huge profits generated online need to be monitored along with the possibility of keeping some of this profit in Hungary and channeling it into the budget. In 2013, Internet traffic in Hungary reached 1.15 billion gigabytes making it a potential goldmine for the government if the tax was to be introduced. The estimated annual revenues of the tax, assuming no reduction in Internet use, would have been 175 billion forints (570 million euro). On 4 November, a Hungarian journal HVG observed that while the amendment to the Internet tax proposing a monthly cap on the tax was withdrawn from the government’s website, the tax package “Extension of the Telecommunications Tax” itself remains intact.

Besides the withdrawal of the Internet tax, Orbán also promised to maintain his plans to offer broadband Internet access to every household by 2020. Hungary is currently below the EU’s average in virtually every single digital indicator. Orbán’s government is known for imposing taxes on private industries such as energy, banking and telecommunications to fill the budgetary gaps. According to Orbán, the tax would have been a logical extension of the levies on telecoms and the taxation of traditional phone-calls, as more and more people are using online alternatives. Free Internet in Hungary has won a battle but not the war, as the decision of its taxation has only been postponed.

Hungary’s crazy expensive Internet is driving people to throw their computers into the street (28.10.2014)

Commission slams Hungary’s “Internet tax” (28.10.2014)

Hungary will shelve Internet tax plan for now, Orbán says (31.10.2014)

Hungary plans new tax on Internet traffic, public calls for rally (22.10.2014)

Around 100,000 Hungarians rally for democracy as internet tax hits nerve (28.10.2014)

The Internet tax cannot be introduced in this form (only in Hungarian, 31.10.2014)

Jóseph Szájer: There are times when you have to “talk tough” (only in Hungarian, 28.10.2014)

Proposal on Internet tax cap withdrawn (only in Hungarian, 04.11.2014)

(Contribution by Polina Malaja, EDRi intern)