Hungarian Advertising Association urges dialog on tax

Banking

The Hungarian Advertising Association is calling for negotiations with the Hungarian government regarding planned changes to the advertising tax, the association announced today in a statement. The association believes there is a need for professional dialogue, however, its point of view is that the tax should be fully withdrawn.

“Imposing a tax on Hungarian media companies with low turnover, such as newspaper publishers, will challenge their very survival,” the statement says.

Hungary’s Cabinet Chief János Lázár told reporters yesterday that he will propose a reduction to the advertising tax at the ruling Fidesz party’s upcoming fraction meeting in Mezőkövesd. Reports say the plan to change the tax came from EC pressure, and is not contingent on RTL Klub reducing its criticism of the government.

According to the association, Lázár’s plans would not only affect media companies but traders, service providers, Hungarian producers and retail chains as well. This would result in price increases in the short term, increased inflation, the reduction of demand and the stifling of economic output, the association foresees.

Noting a study prepared by OECD in 2014 on the advertising tax, the association said it is clear that it will have negative consequences. Referring to neighboring Austria as an example, where a 5% flat tax is in effect, the association said that the number of media participants dropped by 17.5% after the introduction of that tax.

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