Parliament approves ad tax hike

Banking

An increase in Hungaryʼs advertising tax from 5.3% to 7.5% was approved by Parliament on Tuesday morning. The proposal put forward a fortnight ago by Lajos Kósa, parliamentary group leader of the governing Fidesz, was supported by 117 MPs, with 58 against.

Online news portal index.hu observed that the government, and Fidesz figures within it including Kósa himself, had recently issued conflicting statements with regard to raising the advertising tax.

At the end of March, the Ministry for National Economy submitted a proposal to raise the tax to 9%, but this was not put on the agenda. Indeed, as index.hu notes, Kósa said at the time that the government would like to reduce, not raise the tax - but then went on to submit the present bill proposing a hike to 7.5%.

The tax increase is expected to hit the domestic ad industry badly, as well as media not reliant on state adverts or government propaganda, according to recent reports.

Kósa earlier mentioned that the tax rate would be maintained for four years. However, index.hu notes that the Hungarian state must  refund ad taxes already paid by companies as the law currently in force cannot be reconciled with EU competition law.

Previously the Hungarian Newspaper Publishers Association (MLE) and the Association of Hungarian Content Providers (MTE) had protested against the planned tax hike, arguing that it would continue to hold back or practically eliminate the sectorʼs already meager profits and lead to the disappearance of further media products and shrink the number of enterprises active in the sector.

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