Hungary’s operators say taxes threaten broadband development

Hungary’s operators have lashed out at moves by the country’s government to impose yet another tax on the telecoms industry, according to a report from Dow Jones Newswires.

Earlier this week, authorities served notice of plans to introduce a new telecoms-specific tax they say cannot be passed on to consumers.

Set to come into force on August 1, the new rules would require operators to pay a tax on phone calls by business customers of HUF3 ($0.014) per minute, up from a current per-minute rate of HUF2 per minute.

Hungary’s operators have lashed out at moves by the country’s government to impose yet another tax on the telecoms industry, according to a report from Dow Jones Newswires.

Earlier this week, authorities served notice of plans to introduce a new telecoms-specific tax they say cannot be passed on to consumers.

Set to come into force on August 1, the new rules would require operators to pay a tax on phone calls by business customers of HUF3 ($0.014) per minute, up from a current per-minute rate of HUF2 per minute.

Text messages sent by business customers will also be taxed at a rate of HUF3 per text, while the monthly tax ceiling for a business customer will be lifted to HUF5,000.

Hungary’s Association of Information Technology, Telecommunications and Electronics Companies (IVSZ) – which represents the interests of the country’s operators – has issued a statement saying the changes will discourage operators from making investments needed to improve Hungary’s broadband infrastructure, according to Dow Jones.

The IVSZ also believes the new tax would devalue the frequencies the government is due to sell later this year.

It also claims that authorities did not consult with its members before announcing plans to introduce the new tax.

Hungarian operators – which include incumbent Magyar Telekom (Budapest, Hungary) (partly owned by Deutsche Telekom (Bonn, Germany)) plus subsidiaries of Vodafone (Newbury, UK) and Telenor (Fornebu, Norway) – have already been hit by two telecoms-specific taxes relating to the fixed-line infrastructure over the past year, while taxes imposed on mobile operators are among the highest in the EU.

Magyar Telekom says the second of the fixed-line taxes has reduced its earnings before interest, taxation, depreciation and amortization by €23 million ($30.8 million) this year (booking the entire charge in the first quarter).

Moreover, research conducted by AT Kearney, a consultancy, shows that taxes account for 40% of the average price per minute of a phone call in Hungary – more than in any other European country.

The IVSZ is urging authorities to abandon their plans to introduce a new tax.