Proposal for heavy advertising tax in Hungary seen threatening press freedoms

BUDAPEST, Hungary – A new proposal in Hungary to impose a heavy tax on media advertising revenues threatens the free press, journalists and analysts said Tuesday.

A draft bill presented by Laszlo L. Simon, a lawmaker from the governing Fidesz party, would tax Hungarian media companies’ annual advertising revenues in several steps, rising to a maximum rate of 40 per cent on revenues above 20 billion forints ($89 million). The tax would come on top of the usual ones on earnings and payroll.

Peter Csermely, deputy editor of the generally pro-Fidesz newspaper Magyar Nemzet, said the proposal was a government attempt “to step on the throat of press freedom.”

“The ad tax shrinks media resources, makes its job more difficult, limits its efficiency and impedes it from fulfilling its tasks,” Csermely wrote in a signed editorial published Tuesday.

Since 2010, Prime Minister Viktor Orban has been trying to centralize political control and increase the role of the state in all walks of life, from education to business and the media.

Agnes Urban, an analyst at Mertek Media Monitor, said the tax could also increase government influence on Hungary’s commercial TV market.

The highest tax bracket would affect only RTL Hungary, the country’s largest broadcaster. RTL has been the ratings leader over TV2, which was recently sold by its German owners to two station executives widely reported to have links to business interests close to Fidesz.

“Besides general intimidation, the government’s distinct aim is distort the commercial” TV market, Urban said. “It is important for the government to improve TV2’s position and weaken its largest competitor.”

RTL estimated its share of the ad tax would be about 4.5 billion forints ($20.1 million), roughly half of the expected state revenues from the levy and, according to Urban, nine times its 2013 profits.

Simon, the lawmaker, said his aim is to eventually also tax ad revenues by Internet companies like Facebook, You Tube and Google.