Parlt adopts law on phone tax

Budapest, May 18 (MTI) – Parliament on Friday adopted a law on taxing phone calls and texts with annual revenues of 44.4 billion forints (EUR 151.86m) targeted from August.

The 2 forint-per-minute levy paid by service providers will be capped at 700 forints (EUR 2,34) a month for individuals and 2,500 forints (EUR 8,37) for businesses, while the first ten minutes per month will be tax-free. Text messages will also be taxed at 2 forints each.


The ruling Fidesz-Christian Democrat alliance voted in favour while opposition were against.


The tax is part of efforts to reduce the budget deficit, Economy Minister Gyorgy Matolcsy said earlier.


Hungary’s three largest telcos, Magyar Telekom, Telenor and Vodafone, earlier this week asked the government to withdraw plans for the tax and instead draw up a sustainable proposal after consulting the industry. They said the government had promised to phase out sectoral crisis taxes introduced in 2010, some of which are under legal review in Brussels. Now the burden borne by the telecom sector will almost double, they said in a joint statement.


The new tax will weigh on consumers rather than on service providers, opposition politicians said after the vote.


Gabor Vago of the LMP party said that “under the logic of the market” all service providers would pass the burden onto their customers.


Vago said that the targeted revenue to be collected from the tax approximately corresponded to the cost of setting up a national mobile phone provider, and suggested that this was the actual goal of the new tax.


“The cost will be raised by taxing phone users,” he said.


Selmeczi, the spokeswoman of the ruling Fidesz party, denied that companies would pass on the extra charge.


“This time it is a tax for them (the companies) to pay. This time it is their burden,” Selmeczi said. She argued that if one company wished to raise charges, customers would quit and find another provider.


Matolcsy said earlier that companies would be discouraged by fierce competition from transferring the burden of the new taxes onto customers.


Telenor Magyarorszag, the Hungarian unit of Norwegian Telenor, said on Thursday it would pass on the new tax on telephone calls and text messages to customers until one of the two special taxes imposed on the sector was phased out. Telenor said it would cause far more damage to the economy if they responded to the new tax by making lay-offs or stopping developments.


Vodafone warned that the new tax could substantially restrain investments as well as resulting in a decline in turnover, which would indirectly negatively impact telecom companies’ VAT payments.


The main opposition Socialist party vowed to abolish the current government’s planned new telecoms tax if elected to government.


Jozsef Tobias, a senior official of the party, told a press conference on Friday it was clear from company reactions that ordinary residents would bear the brunt of the new tax. Tobias noted that the crisis taxes were subject to a legal review by the European Commission. If it rules against Hungary, the government will make residents pay for the damages under a law linked to Hungary’s new constitution.


Emergency calls and calls on lines for donations will be exempt from the tax.

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