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Telenor in talks with gov't on proposed telephone-call, text-message tax

Banking

Communications Director István Kutas of Telenor Magyarország, the Hungarian unit of Norwegian telecommunications company Telenor, told MTI that the company is in talks with the government on "how the burden passed on to customers can be as small as possible" regarding the proposed HUF 2-per-minute tax on telephone calls and HUF 2-per-message tax on text messages.

The government announced the proposed tax on telephone calls and text messages as part of its Széll Kálmán Plan 2.0, an updated version of the spring 2011 Széll Kálmán structural-reform plan, on Monday.

The online news portal index.hu reported that telecommunications companies operating in Hungary are attempting convince the government to introduce a subscription-based tax rather than a turnover-based tax.

Kutas said that in addition to the problems regarding the base and the collection of the new tax, the required restructuring of fee packages and technical investments would also represent significant burdens for telecommunications companies. Kutas added that necessity of completing the necessary changes at such short notice -- by July -- would also entail difficulties for the companies.

Kutas told MTI that the new taxes would cause the telephone and text-message fees of a substantial number of customers to rise by double-digit percentage points, and the higher telecom cost would also make the Hungarian companies less competitive.

Kutas said that there are many unresolved matters surrounding the taxes, citing the collection of the taxes from clients with pre-paid cards, billing of second-based packages and the status of guaranteed free-minutes as examples of such issues. Kutas added that the possible elimination of guaranteed free-minutes would be especially painful for corporate clients, most of which choose packages containing such minutes so that their employees can call one another free of charge.

The government expect the proposed taxes to generate revenue of HUF 30 billion in 2012 and HUF 52 billion from 2013. This computes to an average of just over HUF 2,000 per mobile- and landline-telephone customer in Hungary in 2012 and just over HUF 3,600 per customer beginning in 2013. There are currently 11.5 million mobile-telephone subscriptions and 2.9 million landline telephones in Hungary.

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