Hungary Suspends Internet Tax After Mass Protests
After large-scale protests that started on Sunday, October 26 and continued throughout the week, the government of Hungarian Prime Minister Viktor Orbán decided to cancel a proposed tax on internet usage.
The tax was put forward as part of the draft 2015 tax bill submitted to the Hungarian parliament by Orbán’s rightist government, which has been widely accused of putting into place anti-democratic policies. The draft law would levy a fee of 150 forints (about €0.48, or $0.60) on internet providers per gigabyte of data traffic. The government claimed that the tax was needed to balance the budget in 2015, but citizens objected both to the financial burden, asserting that a tax on providers would trickle down to the consumers, and to the restriction of access to information and free speech they asserted the tax would bring.
The dissent began when Balazs Gulyas, 27, a former member of the Hungarian Socialist Party, created a Facebook page that rallied people to take action against the tax. The page has gained more than 240,000 followers since it was set up following the announcement of the tax, surpassing the follower count of Fidesz, Hungary’s dominant political party, of which Orbán is a member. “This is limiting free access to the internet and information,” said Gulyas. “It is an attempt to create a digital iron curtain around Hungary.” It is estimated that over 10,000 people gathered in front of the Economy Ministry in Budapest on Sunday. Some demonstrators even went to the nearby headquarters of the Fidesz party and threw old computer parts at the building, breaking some windows.
The organizers of the Sunday protest gave the government 48 hours to withdraw the tax legislation and warned that another protest would follow on Tuesday if this request were not met. The government replied that it would cap the tax at 5,000 forints per month for companies and 700 forints for individuals, but this did not appease the protesters. The promised Tuesday protest prompted Orbán to stop the tax from going through, at least until further notice. “We are not Communists. We don’t go against the will of the people,” claimed Orbán. This statement was seen by some as an affirmation of the similarities between Fidesz and the old Hungarian Socialist Worker’s Party, the nation’s ruling party during the Cold War. Further adding to the controversy, the cancellation of the tax may not be permanent: “The tax code should be modified. This must be withdrawn, and we do not have to deal with this now,” Orbán stated, adding that there would be a national consultation on the matter in January of next year.
In recent years, Orbán’s government has imposed special taxes on the energy, banking, and retail sectors to keep Hungary’s budget deficit in check, threatening profits in some sectors of the economy and worrying international investors. However, this time Orbán was forced to back down for several reasons, the biggest of which was the incredible backlash from the population. As BBC’s Nick Thorpe stated: “He took on the best-organised community in the country - internet users - and lost.”
The reaction from the European Commission, the European Union’s executive body, has been overwhelmingly negative. Ryan Heath, spokesperson to former Commission Vice President for Digital Agenda Neelie Kroes, delivered a speech condemning the tax for being unilateral in the internet’s global context, and as being part of a pattern of actions taken by Fidesz that limit freedom and take rents without any economically or socially beneficial outcomes. In the context of the EU, Heath commented: “Hungary is below the EU’s average in virtually every single digital indicator. The digital part of the economy is probably the main thing in the economy keeping Europe out of recession right now. So taxing that, in a country that is already below the average on digital indicators, is a particularly bad idea.” He added that allowing the tax to become a precedent in Hungary would create problems for all of Europe’s economic growth.
These protests come during a time when net neutrality is being hotly debated in the United States, especially in light of President Obama’s announcement on Monday of his support for complete net neutrality. Hungarian protesters’ claims that taxing the internet would impede equal access to it and further economic divides in the population echo the claims of net neutrality activists in the US. While American Internet Service Providers (ISPs) don’t want to tax the internet, they are demanding that internet companies like Netflix and Hulu, which use much more bandwidth than other websites but pay the same amount for servers, pay them more so that they have the funds to keep expanding in order to support the increasing bandwidth use coming from these companies. Net neutrality advocates assert that internet companies will raise subscription fees for customers, resulting from a trickle down effect similar to that of the Hungarian tax. Another issue is paralleled in the arguments against the internet tax, which is that the internet is a global phenomenon, and any national decisions would be unilateral and impossible to apply across the board.
Some net neutrality proponents are taking a cue from Hungary and planning similar protests in the United States, though they’ll likely be less successful than in influencing any resolution the Federal Communications Commission (FCC) makes concerning net neutrality. However they decide, it seems that the internet’s global scope will render any decision concerning it relevant to the entire world.