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EU to start proceedings against Hungary on telecom tax

The European Commission is about to start infringement proceedings against Hungary next Monday because of the extra tax levied on the telecommunications sector, Bruxinfo learned from reliable sources. Investigations regarding other sectoral taxes are still underway. Jonathan Todd, spokesperson of Neelie Kroes Telecommunications Commissioner declined to comment on the issue.

The European Commission, that started the investigations last October, came to the conclusion that the extraordinary tax levied on the telecommunications industry is not in line with the EU legislation declaring the liberalization of the market, a telecommunications directive accepted in 2002. The directive declares that all taxes levied on the telecom sector can only be spent on expenses associated with the regulation of the sector. A source who wished to remain anonymous explained to Bruxinfo that this directive aims to secure that new players entering the market would not face obstacles.

Telecommunications Commissioner Neelie Kroes sent a letter to the Hungarian governement shortly after the law was introduced in October, requesting information on the relevant law. After months of investigation, the commission appearently made a decision to start a procedure against Hungary, the Bruxinfo wrote. According to the portal, Brussels finds many similarities between the taxes in Hungary, and the cases of the French and Spanish taxes on the telecommunications industry that have already been condemned by the commission.

The Hungarian government expects a yearly HUF 61 billion income from the tax of the telecommunication sector between 2010 and 2012. ETNO, a European network for telecom companies, issued a notice where the organization expressed its concern about the Hungarian extraordinary telecom tax. They stated that such a heavy burden is worrying  in a sector that represents a driving force for growth and job creation and prepares to invest  huge amounts of money into accessing new generation networks.