Dóra Juhász
Increasing government
influence on media companies
Last
year the Hungarian government adopted an extraordinary tax on advertising
revenue with a progressive tax rate rising up to 40%. It primarily impacts
commercial television stations and companies engaged in business advertising as
well as website developing companies. According to journalists, the new tax
threatens press freedom and shrinks its resources. So we may rightfully wonder
what the government’s aim with the advertising tax is and who the real
beneficiaries are.
The
tax base is the net revenue of the companies subject to advertisement tax and
the rate increases progressively in brackets:
- 0% on the part
of the tax base not exceeding HUF 0.5 billion
- 1% on the part
of the tax base exceeding HUF 0.5 billion but not exceeding HUF 5 billion
- 10% on the part
of the tax base exceeding HUF 5 billion but not exceeding HUF 10 billion
- 20% on the part
of the tax base exceeding HUF 10 billion but not exceeding HUF 15 billion
- 30% on the part
of the tax base exceeding HUF 15 billion but not exceeding HUF 20 billion
- 40% on the part
of the tax base exceeding HUF 20 billion
According to the Act on
Advertisement Tax, the tax base includes the net revenues arising from
advertising activities and the costs of publishing the company’s own
advertisements. The calculation of the tax base is based on the aggregate
amount of the net revenues and the previously mentioned costs. Taxpayers are
also obliged to report the payable tax periodically.
Probably
Hungary’s most popular television channel, RTL Klub, a subsidiary of the German
RTL Group, was hit hardest by the tax. They are expected to pay about half of
what the government will collect yearly in the advertising tax. By contrast,
the competing television station TV2 which is said to be a government ally will
possibly benefit from an amendment to the bill, allowing
firms with losses to reduce their tax base by up to half the loss. Along with
television channels, the tax affects publishers of advertisements published on
the internet as well. The editor-in-chief for Origo, one of the most popular online
news portals in Hungary, was removed after publishing a series of articles
questioning the decisions of the government and several other key journalists
have resigned. Media service providers, including pro-government organisations,
protested against the advertisement tax by holding a 15 minute blackout or
publishing a blank page.
Government
representatives claim that the tax’s aim is to punish entertainment-heavy media
and ensure proportional public burden sharing. They said the incoming revenues
will be spent on education and upgrading schools. Others, however, see the
controversial tax as the government’s way of deepening political centralisation
of the media.
As
a result of the huge resistance, the governing party is renegotiating the law
and considering introducing a flat rate instead. All things considered, leaving
the ad tax in its current form makes the government’s real intentions rather
questionable.
Bibliography:
Feher, M. (2014). Hungary adopts tax on advertising
revenue. The Wall Street Journal.
Retrieved from:
Than, K. (2015). Hungary proposes advertising tax cut
after Bertelsmann complaint. Reuters.
Retrieved from:
Greenslade, R. (2014). Hungarian
media tax threatens press freedom. The
Guardian.
Retrieved from:
Zalan, E. (2014). Hungarian media
in mass protest against new tax rules. EU
Observer.
Retrieved from:
No comments:
Post a Comment