Hungary Internet Tax: Country Reportedly Mulls Taxing Phone Calls, Web Surfing

BUDAPEST (Reuters) - Hungary is considering a new tax on phone calls and Internet usage which could yield up to 50 billion forints ($221.38 million) a year and would help plug budget holes, website Origo.hu reported on Friday, citing economy ministry sources.

Hungary, which is seeking a funding deal with the European Union and the International Monetary Fund, needs to prove to the EU that it can keep its deficit below the EU's ceiling of 3 percent of gross domestic product both this year and next.

The government is expected to finalize its fiscal plans and submit them to Brussels by the end of this month.

EU finance ministers in March suspended Hungary's access to half a billion euros in aid from 2013 for failing to keep its budget in check but told Budapest it could escape the sanctions if it takes remedial fiscal action by June.

Origo said the government would discuss the fiscal plans next Wednesday. It will have to plug a hole of 150 billion forints this year and around 400 billion next year.

Deficit-cutting measures could include a new tax on financial transactions already flagged by Economy Minister Gyorgy Matolcsy.

That new tax, which could bring between 100 billion and 250 billion forints into state coffers depending on which financial transactions would be affected, would come on top of further spending cuts at ministries and reductions in the drug subsidy budget, Origo.hu said.

The Economy Ministry was not immediately available to comment.

Last month Brussels said Hungary's deficit could hit 3.6 percent of GDP in 2013 if Budapest does not take new measures, from a target of 2.5 percent this year.

Hungary's government has promised to phase out taxes worth a combined 160 billion forints on telecoms, energy and retail companies next year and halve its big windfall tax on banks, which at about 200 billion forints a year is the highest in the EU. This revenue loss will have to be offset by the new measures.

($1 = 225.8541 Hungarian forints)

(Reporting by Krisztina Than)

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Comments

[William Brock]

12:15 PM on 04/21/2012

We have taxed internet and phone users for decades...what took them so long? Every month the "taxing" page of my Verizon and Comcast bill gets longer and longer. 10% of the bill, is some phony tax or fee...... added by everyone and their "cause of the day"........

[JosephTX]

11:19 PM on 04/20/2012

Well considering that most other developed countries (if not all of them) have publicly-owned telecommunications grids (except the US, where incidentally costs are astronomically high compared to other countries and 98% of Americans have no choice in ISP's for broadband service), it seems reasonable to tax people as they contribute to the burden of their infrastructure.

[openmissoula]

05:49 PM on 04/20/2012

Vote to *reduce* the costs of individuals to use the internet and increase targeted regulation and taxation of corporations toward that end.

[Rad666]

12:19 PM on 04/20/2012

"Hungary's government has promised to phase out taxes ... on telecoms, energy and retail companies next year and halve its big windfall tax on banks' ------------ So, they are cutting taxes for those sectors and raising taxes for phone calls and internet usage? Makes sense.

[OldCowboy]

12:02 PM on 04/20/2012

Most European countries tax TV owners by the set. Virtually every country in the world taxes telephone usage. There's no reason they couldn't tax data usage as well.

[Amalek]

11:57 AM on 04/20/2012

What a great idea!

[sabresk8ter]

11:20 AM on 04/20/2012

I wonder what's next - taxes on breathing & sleeping?

[WILLIEMOJORISIN]

10:45 AM on 04/20/2012

If they make people pay for something that they've had for free for most if not all of their lives,people will be upset to say the least.

[bobrzik]

10:14 AM on 04/20/2012

Shhhh. Don't tell the Democrats. They might want to try that here!

[gracecfl]

10:28 AM on 04/20/2012

Don't worry Romney and the GOP have already thought about that. Shhhhh but don't let anyone else know. They'll just blame it on the Democrats anyway. Seeing that the Dems have lowered taxes, why would they want to tax the internet. But shhhhhh don't say that either because then people might actually think that you are intelligent....

[WILLIEMOJORISIN]

10:46 AM on 04/20/2012

Don't forget Obama extended the Bush tax cuts to the rich,then sent 30,000 more troops to Afgan. "meet the new boss same as the old boss."

[xobamab]

10:52 AM on 04/20/2012

Whenever the democrats say they lower taxes, some people actually believe it. If that were the case, why do they constantly want to raise taxes? Most democrats have never seen a tax increase they didn't like.

[Jpob]

10:47 AM on 04/20/2012

This is the trial run, haven't you heard!?