Hungary's Pariament Approves Hefty Media Advertisement Taxes

Business » FINANCE | June 12, 2014, Thursday // 15:26
Bulgaria: Hungary's Pariament Approves Hefty Media Advertisement Taxes Critics accuse Fidesz, the ruling party of Hungarian Prime Minister Viktor Orban (in the photo), of making moves to curb media freedom. Photo by EPA/BGNES

Lawmakers in Hungary have backed the introduction of taxes on revenues from media advertisement which could jump to 40% for the biggest broadcasters.

A detailed view on the bill however suggests it will probably have a severe impact on just one TV channel, the RTL Klub, which is owned by the Luxembourg-based German media concern RTL, Germany's daily Die Welt reports.

Under the new legislation, RTL Klub and possibly another channel, TV2, will be forced to transfer 40% of its incomes to the state.

Taxation on advertisement will be imposed according to the size of a media company, with those having declared over HUF 20 B (EUR 65.5 M) of revenues putting aside the biggest share.

Most Hungarian media outlets have staged protests to express their anger at the move, and their actions were supported even by Magyar Nemzet, a newspaper which some consider to be ruling Fidesz party's mouthpiece.

Budapest aims to pour some EUR 30 M with the new tax, but estimates quoted by Die Welt suggest Hungary's economy could lose four times more as a result.

Hefty taxes could harm many media outlets or advertising agencies or even force them to close down.

Fidesz officials, on the other hand, downplay these fears by arguing that most of the "important" media will not be affected as their revenues are below the threshold.

Die Welt quoted Gergely Gulyas, from the ruling party, as saying that Budapest was actually introducing a "health tax", because commercial TV stations caused "significant social damages" to the spirit and body.

The government is exploring ways to reduce the share of personal income taxation in the budget and has explained the measure targeting private media (and mostly broadcasters) is a step in that direction.

Civil society groups have warned new rules will put media freedom in jeopardy.

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Tags: Fidesz, Hungary, media, RTL

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