Hungarian ad tax row escalates

June 13, 2014 11.02 Europe/London By Chris Dziadul

Both local and international criticism of the controversial new advertising tax in Hungary is growing.

Approved by the country’s parliament earlier this week, it will impact on all media companies but particularly RTL Klub, the leading broadcaster, which will be required to pay 40% of its advertising revenues into the state coffers.

BBJ reports that RTL Klub, which is backed by Germany’s Bertelsmann, has now decided to openly criticise the government through its various media outlets.

Its situation contrasts with that of TV2, Hungary’s other national commercial broadcaster, which is seen as broadly in favour of the Fidesz party-led government and has been given a tax break in the new law.

The law has also drawn strong criticism from bodies outside the country. Speaking after the annual assembly of the Association of Commercial Television (ACT), its DG Ross Biggam said:

“By surcharging advertising-based revenues at rates of up to 40%, this legislation must call into question the ability of the Hungarian market to attract the necessary investment to sustain independent and pluralist news media.?Television programming requires significant investment. Between 40% and 50% of European broadcasters’ advertising revenues are spent on high-quality programme content – news, local drama, sports, documentaries and entertainment.?Our meeting was particularly concerned by the lack of consultation with affected stakeholders, and the lack of objective grounds for the tax. Responsible media companies do not question the societal obligation to pay a reasonable level of tax. But rushed and disproportionate measures such as the Hungarian tax on advertising revenues are a threat to the sustainability of media services in Hungary.”

The ACT, a number of whose member companies are active on the Hungarian media market, agreed at its General Assembly to bring this issue to the attention of the EU institutions.

Meanwhile, The European Publishers Council (EPC) has called on the European Commission to challenge Hungary’s new controversial advertising tax, which it says will further erode press freedom and cripple the country’s media industry.

It points out that it is the latest in a series of clampdowns instigated by Hungary, with its parliament having passed a law in 2010 that threatened fines on media who engage in “unbalanced coverage”. The EU threatened legal action and Budapest gave assurances that it would amend the controversial media law in line with EU norms.

EPC executive director Angela Mills Wade said: “This is another attempt by the Hungarian Government to undermine the freedom of the press, a freedom that is highly prized by Europe’s democratic Member States. A free, independent and pluralistic media relies on the income from advertising to invest in programme production and quality, authoritative, accountable journalism. We are also extremely concerned to hear reports of pressures brought to bear on journalists and media outlets who have written unfavourable articles about politicians, and we will be asking the European Commission to take appropriate action to stem these blatant erosions of press freedom.”