Reports: Ad tax to be cut; RTL Klub to stay critical

Banking

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. According to Index.hu, the plan to change the tax came from EC pressure, and is not contingent on RTL Klub reducing its criticism of the government.

Lázár yesterday confirmed news reports that he has been negotiating with German Bertelsmann Group since November. Bertelsmann is the owner of Hungarian commercial TV channel RTL Klub, which has been critical of the government and was apparently targeted by the advertising tax. The tax legislation, passed in June, was written so that RTL Klub is the only media outlet in the highest bracket, which meant the station had to pay 50% of its revenue in taxes.

RTL Klub did not respond to Index.hu’s query about whether they would agree to soften their criticism in exchange for a lower tax. Previous media reports suggested that the government and Bertelsmann made a pact that the government would lower the advertisement tax in exchange for RTL Klub dropping its criticism. However, information received by Index suggested that Bertelsmann has no intentions to make any changes to RTL Klub’s new show, even if the tax is decreased.

Lázár said the Hungarian government has been receiving both formal and informal signals from the European Commission’s Directorate-General for Competition, expressing “serious concerns” in connection with the levy. The EC is opposed to the tax as it puts companies with small revenues into an advantageous position as compared to big companies.

“The Hungarian government needed to decide whether to be involved in a legal issue with an uncertain outcome or to participate in an beneficial agreement,” the cabinet chief was quoted as saying. He added that the EC did not criticize the measure itself, just its volume. He noted that in Austria the advertisement tax is around 5%, the highest in the European Union.

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