Economy
Hungarian Advertising Association concerned about latest tax change plans
Plan to lower the rate
Lázár told state newswire MTI late on Tuesday that legislation on the advertising tax is planned to be amended and the progressive system could be replaced with one with a flat rate. He has mentioned Austria several times as an example, where a similar levy is 5%.
The Hungarian Advertising Association issued a statement on Wednesday, stressing that “extending the advertising tax rules on companies taxed at 0% will unequivocally make it impossible for low-revenue local media companies to remain in business."
The minister said that "although the tax will be lower, more [companies] will be subject to it." He estimates advertising tax revenues to come in between HUF 6 billion and HUF 10 billion, against HUF 6 bn pencilled in for 2015.
As far as the association understands Lázár’s remarks, the minister seeks to extend the scope of the advertising tax not only on media companies, but also commercial and service companies, local producers and commercial chains. The association claims that the measure would have an immediate effect of price hikes that will boost inflation, reduce demand and have an extremely adverse impact on GDP.
It also says an international study by the OECD published in 2014 on the advertising tax unambiguously pointed to the fact that besides numerous disadvantageous consequences the implementation of the levy in Austria, for instance, - where a 5% flat rate is in effect - led to a 17.5% drop in the number of media businesses on the market. Therefore the association urges a professional dialogue with the government and continues to request the elimination of the advertising tax as such.
Consequences of the advertising tax
According to an OECD study published last year, a tax levied on advertising revenues increases the costs of the tax subjects, which may cause a change in key business decisions that will eventually feed through party or fully to consumers. Less will be spent on advertising, the affected media companies will realise smaller revenues, the response to which will be layoffs. And these overall damage the economy.
German ties
The highest rate on advertising revenues is 50% (!) presently, which was knocked higher last year from the original 40%. RTL Klub, owned by German media group Bertelsmann, is practically the only one taxed at the highest rate. Critics say the tax was designed specifically for RTL - as it refused to be a mouthpeace for the government -, which in turn started to criticise the cabinet even harsher in its nightly news. Bertelsmann lodged a complaint against the 'discriminatory' tax in Brussels and objections were made at Chancellor Angela Merkel too. She paid a brief visit to Budapest this Monday and met Prime Minister Viktor Orbán.
She called on Orbán to take a more open approach towards political opposition and civil society.
“I have indicated that even if you have a broad majority, as the Hungarian Prime Minister does, it's very important in a democracy to appreciate the role of the opposition, civil society and the media," Merkel told a joint press conference with the PM on Monday after a three-hour meeting with Orbán.
Lázár told state newswire MTI late on Tuesday that legislation on the advertising tax is planned to be amended and the progressive system could be replaced with one with a flat rate. He has mentioned Austria several times as an example, where a similar levy is 5%.
The Hungarian Advertising Association issued a statement on Wednesday, stressing that “extending the advertising tax rules on companies taxed at 0% will unequivocally make it impossible for low-revenue local media companies to remain in business."
The minister said that "although the tax will be lower, more [companies] will be subject to it." He estimates advertising tax revenues to come in between HUF 6 billion and HUF 10 billion, against HUF 6 bn pencilled in for 2015.
As far as the association understands Lázár’s remarks, the minister seeks to extend the scope of the advertising tax not only on media companies, but also commercial and service companies, local producers and commercial chains. The association claims that the measure would have an immediate effect of price hikes that will boost inflation, reduce demand and have an extremely adverse impact on GDP.
It also says an international study by the OECD published in 2014 on the advertising tax unambiguously pointed to the fact that besides numerous disadvantageous consequences the implementation of the levy in Austria, for instance, - where a 5% flat rate is in effect - led to a 17.5% drop in the number of media businesses on the market. Therefore the association urges a professional dialogue with the government and continues to request the elimination of the advertising tax as such.
Consequences of the advertising tax
According to an OECD study published last year, a tax levied on advertising revenues increases the costs of the tax subjects, which may cause a change in key business decisions that will eventually feed through party or fully to consumers. Less will be spent on advertising, the affected media companies will realise smaller revenues, the response to which will be layoffs. And these overall damage the economy.
German ties
The highest rate on advertising revenues is 50% (!) presently, which was knocked higher last year from the original 40%. RTL Klub, owned by German media group Bertelsmann, is practically the only one taxed at the highest rate. Critics say the tax was designed specifically for RTL - as it refused to be a mouthpeace for the government -, which in turn started to criticise the cabinet even harsher in its nightly news. Bertelsmann lodged a complaint against the 'discriminatory' tax in Brussels and objections were made at Chancellor Angela Merkel too. She paid a brief visit to Budapest this Monday and met Prime Minister Viktor Orbán.
She called on Orbán to take a more open approach towards political opposition and civil society.
“I have indicated that even if you have a broad majority, as the Hungarian Prime Minister does, it's very important in a democracy to appreciate the role of the opposition, civil society and the media," Merkel told a joint press conference with the PM on Monday after a three-hour meeting with Orbán.
