EC slams Hungarian telco tax

10.40 Europe/London, September 30, 2011 By Chris Dziadul

The European Commission has declared a special tax imposed on telecom operators last year in Hungary to be illegal and asked the country to abolish it.
However, the Hungarian government has responded by saying it sees no reason for doing so and is prepared to debate the issue in the European Court.
The tax is one of three imposed by the Hungarian government in October 2010 – the others being on the retail and energy sectors – in order to fill a budgetary hole.
It was designed to bring in some HUF60 billion (€205.5 million) a year and the Commission objects to it on the grounds that the money should have been used to regulate the telecom sector rather than for central budgetary purposes.
Hungary has two months to comply with the Commission’s ruling and failure to do so will see the matter referred to the EU’s Court of Justice.