Fidesz MP hints at cut, not raise, in ad tax

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Hungary will not introduce a 9% advertising tax - almost double the current measure - in 2018, as had been earlier suggested, Lajos Kósa, parliamentary group leader of the governing Fidesz, said at a press conference Tuesday, adding that “we would like to cut the advertising tax,” Hungarian wire service MTI reported.

Kósa’s statement, answering a journalist’s question, comes out of the blue, since Minister for National Economy Mihály Varga tabled an amendment on March 28 proposing to raise the tax on advertising from 5.3% to 9% from June 2017 for taxpayers with revenues exceeding HUF 100 million. The proposal triggered widespread opposition, many claiming that some media outlets could be forced to shut their doors due to the raised tax.

According to Kósa, the governing Fidesz-led coalition, which has an almost two-thirds majority, has asked Parliament to remove discussion of the submitted proposal from the agenda for the time being as Fidesz lawmakers still need to work on the bill and to check whether it is in line with the stand taken by the European Commission (EC) on the tax. He added that if the bill is resubmitted by April 26, it could be passed by the middle of June.

Cabinet Chief János Lázár said last week that the ad tax rate is not yet set and will be determined during 2018 budget talks, according to reports.

Hungary introduced the progressive tax, with rates ranging from 0% to 50%, in June 2014. Back then the EC said that Hungary’s progressive tax rates, abolished since, were in breach of the European Union’s state aid rules, unduly favoring companies that did not make a profit in 2013 by allowing them a tax preference. The EC launched an in-depth investigation into the matter in March 2015 and asked Hungary to suspend application of the tax.

The progressive tax was widely considered by the public to have been aimed at commercial television channel RTL Klub, which has carried news coverage critical of the government, while favoring its more government-friendly competitor TV2.

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