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Hungarian advertisement tax silences independent media

After TV2 – one of the two major Hungarian commercial TV channels – had been sold to businesspersons allegedly linked to governing party Fidesz, its programming took a government-friendly view. Also, just before the parliamentary elections campaign, a new advertisement tax has been imposed on its counterpart, RTL Klub.

At the end of May, governmental sources released information about the introduction of a planned new tax on media advertisement. The reason for the legislation was the alleged 'extra profit' the media channels make and the 'harmful effects' commercial channels have on people's lives.

Despite strong objection by media outlets, the new act was proposed to the Parliament by a governing party MP on the 2nd of June and it was accepted in an urgent procedure on the 11th of June, Parliament being dominated by members of the governing coalition with two-thirds of the seats. The new law imposed a 40% tax on media outlets with earnings above 65 million Euros per year. Apparently, the only Hungarian media channel meeting this condition is RTL Klub.

After the passing of the new law, media reported that RTL Klub could fall out of the highest tax rate because of its negative tax base in the previous years. The amendment of the law was initiated immediately on the 30th of June to make sure RTL Klub falls under the effect of the tax. Soon after this news, Mihály Varga, Minister of National Economy, said that the National Tax and Customs Administration (NAV) has to look into the books of RTL Klub to find out whether the TV channel conducted illegal financial activities. Officers of NAV raided RTL Klub's building on the 2nd of July.

RTL Klub announced its intention of turning to an international court to challenge the new tax on the basis of freedom of the media. According to the channel the expected amount of the tax for RTL Klub is approximately 15 million Euros per year, enough to cause serious difficulties for the company.

The advertisement tax is the latest in a series of actions by the Hungarian Government to silence free media in the country, following restrictive media legislation and criminal provisions threatening the media.

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