Hungary Internet-Tax Protest Swells Into Anti-Orban Demo

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A rally to block a planned tax on Internet use in Hungary swelled into one of the largest anti-government demonstrations since Prime Minister Viktor Orban came to power in 2010.

Tens of thousands of people marched in Budapest yesterday against a plan to introduce a 150 forint (62 cent) tax per gigabyte in the first rally of its size since Orban’s April re-election. Authorities detained six people after some protesters attacked the villa that serves as the headquarters of the ruling party in the capital, throwing monitors and keyboards at the building.

Protesters, who gave the government until tomorrow to revoke its plan, said taxing Internet use was an attempt to restrict freedom of information by Orban, a recurrent argument against a leader whose centralization of power triggered criticism from allies including the U.S. and fellow European Union members. Demonstrators also railed against perceived corruption, after the U.S. this month barred six unidentified Hungarian officials on suspicion of corruption and called on the government to crack down on tax fraud.

“Those who use the Internet see more of the world, that’s why the government doesn’t want a free Internet,” organizer Balazs Gulyas told the crowd. “We’re not going to pay an Internet tax to a corrupt tax authority.”

Appeasing Protesters

The ruling party issued a statement last night as protests were still under way that it would cap the tax at 700 forint and make telecommunication companies pay the levy instead of individual subscribers.

Orban has won every election since coming to power, including his re-election in April to a second four-year term. In July, Orban called for replacing liberal democracy with an “illiberal state,” citing Russia and Turkey as possible examples to follow, while trying to hold on to the country’s EU membership, the source of billions of euros of funding.

The Internet-tax plan was announced after his Fidesz party trounced the opposition in an Oct. 12 municipal ballot, the third victory in six months after also winning European parliamentary elections.

Violence Flares

Some demonstrators with their faces covered by scarves and ski-masks damaged two windows of the Fidesz building, pushed in its fence and scaled its balconies, police said in a website statement. There was no conflict between protesters and officers, it said. Organizers, on their Facebook page, said demonstrations must be free of violence and rallies would continue until the tax is withdrawn “in its entirety.’

‘‘What the protesters did to the building was unbelievable, brutal vandalism,’’ Mate Kocsis, a spokesman for Fidesz, said on state radio today. ‘‘It’s not the first time the Fidesz headquarters was attacked but we can hardly recall such severe damage.’’

The government argued the tax would generate as much as 25 billion forint of revenue. The Economy Ministry said the step is needed because people increasingly use Internet-based services instead of traditional phones.

Hungary already has a phone-call tax of 2 forint per minute or per text message, which is capped at a monthly 700 forints for household subscribers and 2,500 forint for corporate users. The tax generated 42 billion forint of budget revenue in the first nine months of 2014.

Special Taxes

Orban has relied on extraordinary taxes on industries including energy, banking and telecommunications to plug budget holes and reduce the deficit to below the EU’s 3 percent of gross domestic product limit. Hungary exited nine years of EU budget scrutiny in 2013, lifting the threat of cuts to billions of euros in funding from the 28-member bloc.

‘‘It’s a disgrace,” Robert Marko, a 49-year-old protester who works in the information-technology industry, said yesterday. “They’re taking money out of people’s pockets and it will shatter the industry’s business environment.”

Magyar Telekom Nyrt., Hungary’s largest telecommunication company, which is controlled by Deutsche Telekom AG, fell 4.8 percent to a four-month low in the two days after the announcement, before markets closed for a four-day weekend on Oct. 22. It dropped a further 0.3 percent today by 10:28 a.m. in Budapest to 333 forint a share.

The company, with 36 percent of broadband Internet subscriptions in August, said in July that it would cut as many as 1,700 jobs in Hungary through the end of next year. The company competes with the local unit of Liberty Global Plc and, Digi Kft. for broadband customers and subsidiaries of Telenor ASA and Vodafone Group Plc for mobile phone customers.

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