Protests grow over Hungary's internet tax

By bne IntelliNews October 29, 2014

Tim Gosling in Prague -


For the second time in a week, thousands were on the streets of Hungary on the evening of October 28 to protest the government and its plans to tax the internet. Officials quickly issued more pledges to water down the legislation, but there's little, if any, danger to the government. 

With leaders calling the planned tax "a symbol of the government's despotism," protestors filled central Budapest for a second night, with reports claiming over 40,000 had turned up. Around 10,000 demonstrated on October 26 against the plan of Prime Minister Viktor Orban's administration to introduce the world's first levy on the internet. While there was a handful of arrests following those events, the protests have been peaceful for the most part.

The government says that because communication is moving online, the tax is simply a logical extension of the special crisis levy it has waged on telecoms companies since it came to power in 2010. Protestors say the move is yet another example of Orban's authoritarian instincts. The PM was lambasted in the summer as he spoke of plans to introduce "illiberal" democracy and suggested Russia and China are models for state building.

Protest leaders said they are convinced they can prevent the introduction of the tax, with the ruling Fidesz party, which holds a constitutional majority in parliament, having said it plans to pass the bill this week. Activists insisted protests will continue without a "national consultation," reports MTI.

Brussels is also continuing to express unusually stiff opposition. A spokesman for digital commissioner Neelie Kroes said on October 28 that the internet tax is a "bad idea" and the "wrong direction" for a country that "persistently trails in every digital indicator". 

Kroes had openly called on Hungarians to attend the October 26 protests. The Hungarian tax proposal has to "be seen as part of that pattern of actions which have limited freedoms," the spokesman added.

Brussels says it is worried that other countries could be tempted to copy Budapest, which could threaten the wider EU economy. The digital economy is keeping the bloc's head above water right now, the spokeman continued.


In Budapest, the government has responded by promising compromise to both the crowds and the EU. Earlier this week it pledged to cap the tax - which is based on a charge of HUF150 (€0.50) per gigabyte - at HUF700 per month for private subscribers and HUF5,000 for companies. 

On October 28 it promised strict legislation would be added to the bill to prevent internet service providers from passing on the costs to users. The new tax will not impose even a penny worth of new burden on subscribers, Fidesz' press office said.

However, Brussels and commentators appear to be growing weary of Orban's cynicism. As Kroes' spokesman noted, the action fits a pattern in which controversial legislation is introduced in draconian form, only to be watered down as a sign of compromise. The government's rough handling of the banks, or recently introduction of a tax on media advertising, has featured similar "climb downs". The mood on the streets on Tuesday evening appeared to reflect a similar distaste for the government's wider mode of operating.

However, there's little risk to the stability of a government, suggests Ottilia Dhand at Teneo Intelligence, despite a deepening standoff between Budapest and the West in recent weeks. In the absence of viable opposition, and driven by populist policy, Fidesz has won landslides at three elections this year alone. It now has a clear run to 2018. 

"While the demonstration had anti-government overtones and a potential for turning violent, it is unlikely to cause Orban's downfall," Dhand writes, despite predicting further protest. "It is likely that the government's modified proposal will not satisfy the protesters and another demonstration will be staged. Protestors also displayed a certain level of frustration over Hungary's increasing isolation in international relations."

"[T]he anti-government overtones of the protest suggest that, going forward, latent opposition to Orban's policies in individual segments of the population may manifest itself more actively than on previous occasions," she sums up.

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