Taxes on soap, alcohol among Hungary's latest levies

GMT 21:08 2014 Tuesday ,18 November

Arab Today, arab today Taxes on soap, alcohol among Hungary's latest levies

Protesters hold flags and placards
Budapest - AFP

Hungarian lawmakers on Tuesday approved new taxes on soap, alcohol, advertising and supermarkets, the latest in a series of unorthodox levies put forward by controversial Prime Minister Viktor Orban.
The new measures came after a proposed Internet tax on downloads was shelved last month following major protests.
The European Commission, the EU's executive, has repeatedly criticised Hungary's special taxes, saying they negatively affect growth and warning that investment has declined in taxed sectors.
The right-wing Orban, who took office in 2010, has sought the special taxes in an effort to reduce Hungary's deficit. He has imposed levies on the energy, banking, retail and telecom sectors, often blaming them on Brussels or on foreign companies making "extra profit".
Critics say however that it is mostly allies of Orban who are benefiting because their foreign rivals have to pay more tax, and that the tax authority often fails to investigate VAT fraud and corruption allegations.
The new package raises an advertising tax that Germany's media giant RTL says is discriminatory, and which has already hurt parent company Bertelsmann's profits.
The so-called "chips tax" on unhealthy foodstuff will now be applicable to alcoholic drinks, while an environmental fee will be extended on shampoo, soap and other products.
A supervision fee, nicknamed the "Tesco fee" after the British retail chain active in eastern and central Europe, will be raised significantly for large, typically foreign-owned firms.
The personal income tax remains at a flat rate of 16 percent and the value-added tax (VAT) at 27 percent, which is the highest in the 28-nation EU.
The "chips tax" -- nominally about tackling obesity -- was launched in 2011, a tax on text messaging and phone calls in 2012, and last year a financial transaction levy on paying bills and taking cash from an ATM.
Orban's government is also planning to impose a new special tax on tobacco companies that British American Tobacco's local unit has already called "discriminatory".
On Tuesday the chairman of supermarket firm Spar said it will postpone a significant part of its planned investments over the coming years.
The US banned six senior Hungarian officials including the head of the tax authority last month from entering the country over alleged corruption allegations, further souring already strained ties.
Hungarians also took to the streets in recent weeks to demand corruption be stamped out, and the protests against the Internet tax showed that anger was building, experts say.


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