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

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INTERNET TAX
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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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