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Hungary withdraws internet tax proposal

Stan Ward

Stan Ward

November 3, 2014

Last week we reported on a contentious new Internet tax being proposed by the Hungarian government. In a whiplash like turnaround, Prime Minister Victor Orban, barely off the train from a trip to Switzerland, revealed in a radio address this morning his intention to table such a tax- at least for now.

Bowing to pressure from many quarters, Orban used the venue on Fidesz-friendly Kossuth radio to withdraw the proposal to the tax deemed unwarranted by the public at large and by students and corporations in particular. He buried his disappointment in having to bend to public opinion in rhetoric about this being a technical problem. But make no mistake about it this went far greater than semantics; the tax concept was poorly conceived and implemented from the outset.

Orban claimed that “the debate has been twisted,” that the tax was to be borne by providers not individuals, as if this distinction matters in a flat economic scenario. More likely the public reaction was underestimated and the political fallout too great for such a meager revenue gain. Moreover, a heretofore uninvolved sector of the electorate – the young- were mobilizing on the issue. It is likely that the decision was made with future election cycles in mind.

Orban related that he thought the Internet tax was justified but that the mistake was in the haste in which it was brought to light. Instead he pledged a “National Consultation” on the proposed tax beginning in January, thereby distancing himself from a communist attitude of ruling by decree.

The timing of the tax announcement prompted scrutiny as it came amidst corruption charges against some members of the government from the United States and was seen by many as a diversion. If this is so then the government chose a volatile issue with which to create a diversion.

What was most instructive in this episode is the speed at which the anti-tax fervor spread and the breadth of the response. The political lesson to be learned is that the Internet is as potent a tool for rallying dissent as it is for promoting policy.

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