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Hungary “crisis tax” on telcos may go against EU rules

Hungary's government has said an extraordinary tax it will levy on telecommunications companies will ensure the country meets its deficit target. But EU rules allow such taxes only to cover the cost of regulation.

The tax on telecommunications companies, to generate HUF 61 billion in budget revenue a year in 2010-2012, was one of three “crisis taxes” the government said on Wednesday it would introduce. The other two will be paid by energy companies and retail chains. Together with a decision to suspend payments to mandatory private pension funds, the government has said the measures will ensure Hungary meets its 3.8%-of-GDP deficit target.

Answering a question on Friday, Jonathan Todd, spokesman for European Digital Agenda Commissioner Neelie Kroes, said that, under EU regulations, extraordinary taxes may only be levied on the telecommunications sector if the revenue from the taxes is used to cover the cost of regulating the industry. Todd said he was unfamiliar with Hungary's plans related to the issue and declined to comment.

Todd noted, however, that the European Commission had started procedures against France and Spain at the end of September because they levied extraordinary taxes on telecommunications companies to compensate for a fall in advertising revenue at their public television broadcasters. (MTI-Econews)