Hungarian Premier Orban scraps internet tax plan on protests
By Bloomberg
Hungarian Prime Minister Viktor Orban scrapped plans to introduce the world's first Internet tax, bowing to pressure after tens of thousands of people protested at rallies across the eastern European Union member.
"Whatever the government's intension was, this tax simply can't be introduced," Orban said in a state radio interview today in his first public comments since the demonstrations. "We want to govern with the people."
The Internet tax plan sparked two of the biggest rallies against Orban's administration since he returned to power in 2010. The rallies widened into anti-government protests, with demonstrators criticizing perceived state corruption and centralization of power.
Magyar Telekom Nyrt., the Hungarian unit of Deutsche Telekom AG, jumped 5 percen
t to 339 forint by 10 a.m. It competes with the local unit of Liberty Global Plc and Digi Kft. for broadband customers and subsidiaries of Telenor ASA and Vodafone Group Plc in the mobile phone market.
U-Turn
Orban's about-face on the Internet tax plan follows his re- election to another four-year term in April. That was followed by victories in European Parliamentary and local government elections. In July, Orban pledged to replace liberal democracy with an "illiberal state."
The Facebook group that organized the protests called for a celebratory rally at 6 p.m. in Budapest in front of the Economy Ministry. It called Orban's announcement to scrap the tax a "people's victory."
"Orban had to stem this wave of discontent," Peter Kreko, an analyst at Political Capital, said by phone. "This tax had basically no backers, not even among government supporters."
The government planned to impose a levy of 150 forint ($0.62) per gigabyte, which the ruling party later agreed to cap at 700 forint a month for household users and 5,000 forint for companies. Orban said his aim was to extend an existing levy on the telecommunications industry, which includes a tax on phone calls and text messages. He conceded that's not what people saw.
"The government wanted to expand a telecommunications tax and yet the people saw an Internet tax," Orban said. "People are questioning whether the tax makes any sense at all."
Two rallies in Budapest drew tens of thousands of people in the past week. Protesters said the tax, which the government counted on to generate about $100 million, was less about the budget than a government trying to limit people's access to information.
Orban's Power
It followed four years of power consolidation by Orban, including the approval of a new Constitution over opposition protests, the ouster of the Supreme Court's chief justice and the curtailment of court powers as well as the establishment of a media authority exclusively led by ruling-party lawmakers.
An overhaul of the electoral law allowed Orban to retain his constitutional majority in April's election, even as he shed voters while his Fidesz party remained by far the most popular group amid a divided opposition. This month, the government had to defend itself against allegations of graft at the National Tax Office after the U.S. barred six unidentified Hungarian officials on suspicion of corruption.
Orban's concession today may not be the last word on the Internet tax. The prime minister said he wants to start a "national consultation" with voters about Internet regulation and whether the government can tax the "huge extra profit" on the Internet.
Short-Term Concession?
Today's concession may be reversed if Orban repeats what he did in December of 2012 when faced with street protests by high- school and university students, Kreko said. Then, Orban pledged not to cut government aid to universities, only to reverse course once the rallies faded.
The Internet-tax protest organizers called for a big turnout in a demonstration today to keep up the pressure.
"Let's show up in big numbers today to show that we won and so that Orban won't resort to tricks and never again thinks about limiting Internet freedom," read a post on the Facebook page that organized the protests, "A Hundred Thousand Against the Internet Tax," edited by activist Balazs Gulyas.