Hungary plans per-gigabyte “internet tax” on service providers

Hungarian internet service providers will be forced to pay a new “internet tax” on the data use they enable, if the country’s parliament passes a new tax bill.

Reports suggest that this bill will go through, as the ruling Fidesz party has a two-thirds parliamentary majority. It would levy a tax of 150 forints, or around 62 U.S. cents, on every gigabyte of data used by ISPs’ customers – an internet-focused extension of an existing tax on phone calls and text messages.

As many fear the ISPs will pass the costs on to their customers, Hungarian internet users are predictably apoplectic, and some have reportedly planned demonstrations for this coming weekend. Fidesz has responded by saying there will be a cap on the tax, perhaps “around one thousand forints,” presumably per month. Economy Minister Mihály Varga has also suggested that competition would stop the ISPs raising their prices.

Telecoms companies would also be able to offset their corporate income tax against the new internet tax and existing telecom tax. Despite all this capping and offsetting, the Hungarian economy ministry said it expects to derive $83 million a year from the tax.

The Hungarian opposition has urged the government to drop its plans, warning that increasing the cost of web usage would take the country back to the 1990s.

Meanwhile, Hungarian web entrepreneur Zsolt Várady, who founded a once-popular but now defunct social network called iWiW, has reportedly sued all the Hungarian political parties that have been in government since 1990, for creating a tax system that allegedly violates his constitutional rights to fair economic competition, enterprise, free economic competition and fair working conditions.

Várady contends that the system is so “impossible” that viable businesses have to resort to tax fraud or evasion, giving the increasingly authoritarian government opportunities for “blackmail and manipulation” of businesses when they need it.