
Hungary plans new tax on Internet traffic - pzs
http://uk.reuters.com/article/2014/10/22/uk-hungary-internet-tax-idUKKCN0IB0RI20141022
======
sz4kerto
Some background.

\- the proposed rate is 150 HUF/GB, that's around 0.5 EUR/GB or 60 cents/GB.

\- the internet speeds in Hungary are relatively high, it's quite common to
get 100 Mbps for $20/mo

\- the minimum wage is around 250 USD/mo, the average net wage is $650/mo

\- the levy should be paid by the providers, but probably they're going to be
able to deduct it from their other taxes, that means profitable companies
won't pay, currently non-profitable companies will

\- the tax will be capped per subscription, the cap is rumored to be around $4
for individuals and around $25 for companies -- but most households have 2-3-4
phones, cable internet, etc.

\- it's very likely that this is going to wipe out the currently loss-making
telcos that can then be bought by the state (nationalized) and their assets
funneled to cronies (even there was a public bid for the assets nobody would
start a new company as it'd be making losses in the beginning therefore they
could not deduct this tax from their taxes -- so it'd result in even more
losses)

Also, it's very much likely that this is a deliberate distraction from the
political conflict between the USA and Hungary that has emerged last week.
(Edit: it's still bad though, as a journalist put it, it's like spraying
pepper in the eyes of a pitbull: it's distracting, but you might end up in a
really big trouble.)

~~~
pentium10
internet speeds in Hungary are not so high. Look at east Romania what offers,
you get 1GBps for 7 euro/mo.

~~~
NicoJuicy
"Fun" fact: the reason why internet is cheap / fast is because of the webcam
industry in Romania.

~~~
hippiehippo
TL;DR: BitTorrent being the reason doesn't sound so interesting for a Vice
article.

As a person who helped build a "district ISP network" back in the early 2000s,
I can tell you that that reason is just some Vice.com style linkbait.

Romania has great Internet speeds because the authorities tolerated us
installing cables all over the darn place. Back then it wasn't uncommon to
have almost half a dozen ISPs in a one square mile neighbourhood, all offering
50-100 mbps in the city and 1-2 mbps actual Internet speeds, without any FUP.

We were almost the same age and people didn't care about the low international
speeds because we could all share movies and music at 50+ mbps (and 0.5 mbps
was more than enough for browsing).

This was happening way before the video chat industry took off. Also, for that
kind of stuff you need good sustained upload, but the ISPs are still limiting
the upload speed to around 30 mbps even for gigabit connections. This doesn't
affect BitTorrent (which can be left open over night).

~~~
NicoJuicy
According to
[http://www.itu.int/ITU-D/treg/broadband/BB_MDG_Romania_BBCOM...](http://www.itu.int/ITU-D/treg/broadband/BB_MDG_Romania_BBCOM.pdf)
, there was only a broadband penetration rate of 5,5% . Perhaps some of the
Vice article are lies, but probably not all of them.. As bittorrent doesn't
generate as much money as the webcam industry...

Could be, it's just "believing" that the article isn't a whole lie.

------
edem
Actually this is just a smoke screen. As a native Hungarian I can tell you
this. The Hungarian government is doing business with the Russians (we build a
nuclear power plant funded by Russian loan) which the EU and the USA does not
like. I don't like it either because Russia is blackmailing Hungary. There can
be no good outcome of this situation because we either infuriate the Russians
(we depend on the Russian gas) or the EU/USA. So the government came up with
this tax nonsense as a distraction. As you can see they achieved their goal.
Everybody is talking about the internet tax while the government is doing
business with the Russians under cover. I don't like the 150 HUF/GB but I know
how it works here. There will be an upper bound per month (say 4000 HUF) for
the tax. The ISPs can put this tax as an expense in their books and in the end
the user will see something around 1000-2000 HUF per month plus. This is how
it goes here. Make no mistake I do not protect our government or the Russians.
I hate both but I want you to see what really goes on here.

~~~
coldtea
> _So the government came up with this tax nonsense as a distraction. As you
> can see they achieved their goal. Everybody is talking about the internet
> tax while the government is doing business with the Russians under cover._

Sorry, but lest this is marked as "informative" by anyone due to it coming
from a native Hungarian, I'd like to say (as a neighborhood) that this "it's a
distraction" sounds like the usual ideas of how goverment works put forward by
some blogs, columnists, that are not really grounded in reality.

It's not like Hungary only does "business with the Russians" for the very
short term that this will be in the news, for it being a "distraction" to be
effective.

It's also not like there would be any popular backslash on "doing business
with the Russians" at this particular time either, so that they would need a
distraction.

It's more likely that they just wanted an extra tax and some extra dough
coming their way, and came up with this, sans distraction nonsense.

~~~
pjc50
The opinion when this came up on /r/europe was that it was an attempt at
clamping down on access to independent and non-Hungarian media by making
internet use unaffordable.

Edit: well, that seems comprehensively debunked

~~~
adamors
That doesn't hold water either. 150 HUF/GB is nowhere near unaffordable.

~~~
sharpneli
Actually without a datacap it becomes quite expensive.

Purchase a modern AAA game on steam, they're around 30G. Instant 15e
additional tax when downloading it. And that tax gets paid every time you
redownload anything.

Also netflix becomes a lot more expensive. 50 cents per hour for standard
definition or 1.5 euros per hour in HD.

~~~
riffraff
there is a cap on the tax though, you'd basically pay extra on the first
couple of movies (well, there isn't any netflix in hungary, so you'd be paying
for torrents)

------
rdl
I'm maybe a bit more libertarian than most HN readers, which is already a bit
more libertarian than most people (especially Europeans), but when I do
support taxes, I'd rather they be as broad-based as possible, unless they're
targeting something which has negative externalities.

Universally applied VAT is (aside from the data-collection requirements)
proven to be one of the least economically distorting taxes -- creating the
least deadweight loss.

This tax seems almost pathologically bad -- taxing something with largely
positive externalities. Normally you try "sin taxes" which tax things reviewed
as having NEGATIVE externalities (CO2, smoking, even unhealthy foods).

It's like taxing people for reading books, or for volunteering their time to
useful charities, or for picking up litter on the street. Actively
discouraging something which has positive returns to society as a whole when
people use more of it!

~~~
sliverstorm
It seems to me more like an infrastructure use tax, which seem to work fine.
Don't you pay usage-based taxes for the public roads (via gasoline taxes)?

Now I guess the next question is, are the pipes in Hungary publicly owned.

------
bujatt
This is insane.

As a local I can't decide whether this action is just to deter public
discourse on the recent claims of political corruption (that involved banning
the Director of National Tax Authority from entering US) or if it is for real.
Either cases are really, really bad.

~~~
blumkvist
Orban is fucking insane! What the hell are you thinking? I hope you will get
rid of that maniac ASAP.

~~~
peterfirefly
What are his chances of staying out of jail when/if he relinquishes power?

------
venomsnake
Holy shit ... downloading a steam game will cost more than the game. They
already get VAT on the connectivity.

First - IT in Hungary dies.

Second Hungary is on the bleeding edge of mesh networks.

A 60 cents per terrabyte excise seems less unreasonable.

~~~
higherpurpose
I can definitely see wide LANs or mesh networks starting to appear in Hungary,
and I can also see the government making them "illegal" within 3 years of them
appearing (would probably impact LANs more than mesh networks, but probably
not that much either of them).

~~~
fsiefken
exactly, more power to projectmeshnet.org and serval. they can always
resurrect fidonet, it's still in use in Ukraine and Russia. host mirrors of
the most popular resources, wikipedia, imdb, gem, apt and git repository's
just like in the bbs & ftp days. use goldbug for mail and chat, yacy for a
veronica like meshspace search engine and twister and tribbler for p2p
blogging and vlogging.

------
phaer
That might be a good situation to remember that almost all television and
radio stations in Hungary are under governmental control and so it might make
sense for the government to keep people away from too much Internet usage.

------
JumpCrisscross
Let's consider the effects of a tax on internet service providers. Critically:
the tax is levied in Hungary, but not in surrounding countries.

The average household net-adjusted disposable income per capita in Hungary is
$15 240 [1]. At 60¢ per GB, the tax is not breaking household budgets. Neither
should it be onerous for bootstrapped small businesses. Moving hosting out of
Hungary would mitigate most of their tax burden (live media would be an
exception).

The case becomes more interesting when we consider scaling. Few businesses
today can compete with underpowered IT. The bandwidth needs of a business's IT
operations can be assumed to scale with the enterprise. Speaking as a
financier, this sets up an easy transaction. If your business scales, move it
out of Hungary. The benefits of offshoring scale with the company.

Avoiding that incentive structure is probably why we see the corporate tax
offset. But a tax deduction is only of value to profitable companies. This
turns the linear scaling disadvantage into an option-like structure. If you
scale AND experience losses, there is a penalty for being in Hungary. The more
cyclical or volatile a company's earnings, the greater the risk of incurring
the tax and thus the benefit for offshoring. If I were a European M&A banker,
I'd be working out the ceiling on earnings volatility a Hungarian company
would rationally tolerate given this tax. I'd then run through the stock
market and private holdings records and begin working to merge those for whom
this tax would be risky out of Hungary.

Start-ups are also loss-making business entities. For a bootstrapping
Hungarian, the cost of relocation isn't worth a few hundred dollars in tax
savings. But for a VC it may be. If I were Austria, the Czech Republic or
Poland, I'd offer every Hungarian entrepreneur a deal: We will lend you money
for relocation. You repay it at 1/2 the tax we estimate you would have paid in
Hungary. If I were a European VC, I'd be dusting off a recruiting pitch for
bright Hungarian engineers and entrepreneurs.

[1]
[http://www.oecdbetterlifeindex.org/countries/hungary/](http://www.oecdbetterlifeindex.org/countries/hungary/)

------
freshflowers
The libertarian panic is amusing. There's nothing inherently wrong with taxing
internet traffic, unless you believe tax itself is wrong. Virtually everything
that goes into providing internet services gets taxed, so why should internet
traffic itself be sacred?

Of course it is still a Very Bad Idea(TM) in terms of economic and social
impact versus benefits. And of course in the context of a totally corrupt
country like Hungary there is a distasteful hidden agenda behind it.

But besides being counterproductive, tax on internet traffic is just "meh". We
just don't want to pay tax on our stuff.

~~~
DINKDINK
Would you say that 501.3c's are a bad idea? If not, they you have to agree
that shielding certain activities from taxes is in the best interest for
society. So why do you think increasing the barrier to entry for a society to
communicate, create, discuss is positive?

------
pentium10
there is an upper limit(cap) in the tax, per month, max 700 HUF (2.2 EUR) for
population and max 5000 HUF (16.3 EUR) for companies. This text is hidden in
the proposal. Just media is not reading it with attention.

~~~
sz4kerto
Nope, it isn't. The proposal
([http://itcafe.hu/dl/cnt/2014-10/112746/01705.pdf](http://itcafe.hu/dl/cnt/2014-10/112746/01705.pdf))
only contains the number '700' twice, one is unrelated, at the other
occurrence the text says that the tax on phone calls and text messages cannot
exceed HUF 700/mo/subscription.

After the outrage now there're rumors about these caps, but they were not part
of the proposal.

~~~
pentium10
I confirm it will be a cap, even if you can't find in the text. It will be
700.

~~~
sz4kerto
As a result of an amendment after the major uproar. You said that

"This text is hidden in the proposal. Just media is not reading it with
attention."

Both statements are untrue.

~~~
leni536
_As a result of an amendment after the major uproar._

Isn't this why we have proposals?

------
mistakoala
Doesn't sound so dissimilar to the EU's Internet tax that was planned years
ago (not sure if its email tax plan was part of the same thing). I don't think
it would be unreasonable to assume that this plan would get some support at
European level.

In the UK our last government imposed an Internet tax, but at a flat monthly
rate. Fortunately, it was scrapped.

~~~
e7620
There have been some schemes in Europe to tax Internet-related services, but
they were mostly a result of lobbying and at least benefited some group, like
unionized film makers or ISPs. But the difference is nobody welcomes this tax.

------
crazy1van
This relates to my biggest fear with net neutrality. I don't think that NN and
internet taxes are directly related. I just worry that once the government
gets tinkering under the hood with the internet they are going to find a few
other things they'd like to change as well.

------
yottah
I really think EU/NATO/US should step up covert and intelligence activities to
overthrow the Hungarian government. A backwards and evil regime that has taken
over Hungary should not be permitted to exist in the heart of Europe.

~~~
arrrg
Dude, calm down. Human rights violations absolutely have to be sanctioned,
sure, but transparently and above board. To be honest, at a certain point I'm
fully in favor of tossing Hungary out of the EU (it's no place for
authoritarian regimes), but covertly overthrowing governments? Not cool.

~~~
Kutta
How much are we willing to hurt an economy with sanctions and embargoes (Iran,
Cuba anyone?), instead of focusing on overthrowing a nasty government?

I'm being somewhat facetious here, as current Hungary is far from the point
where direct action against govt could or should be considered.

I'm just stressing the point that punishing the populace for the sins of the
leaders is also uncool ceteris paribus.

PS: I'm Hungarian.

~~~
arrrg
Well … I don’t think you can underestimate the threat of throwing Hungary out
of the EU. But it’s also a politically risky move (there are large groups of
people – maybe not majorities, but large groups – in many EU countries who do
want out and any indication that that’s a realistic option politically, even
if it’s throwing a member out, would provide lots of political cover for those
groups), so ultimately unlikely to happen. Also, Russia would be more than
happy to pick up any stragglers, and that can’t be good for anyone.

Honestly, I have no idea how the EU should deal with Hungary (or, if we
generalise the problem, any member state getting an authoritarian government).
I’m deeply, deeply uncomfortable with anything involving actual violence.
That’s the Europe of that past and that Europe was a horrific place I never
ever want to return to. The EU should be able to solve internal conflicts
politically. That’s the issue here. And the EU can’t (and shouldn’t) force
radical change inside countries – but it should be a vigilant watchdog for
human rights. I’m just not sure exactly how to implement that in practice –
but I’m certain I don’t want violence.

------
landryraccoon
Ok, this is a contrarian opinion, but I think this is a great idea. This is an
experiment and there isn't any data around the impact of a broad tax on
internet on the economy. If Hungary implements this tax, then every other
country can use that data to inform their own decisions about taxing the
internet. In reality, as everyone has already pointed out, this experiment
will fail horribly - which is great, because eventually SOME country or state
is going to want to do this and I'm glad the experiment is being run in
Hungary and not the United States or the EU.

~~~
mercurial
Hungary is a member of the EU.

~~~
landryraccoon
Well, fair enough, but does that detract from my point?

------
rainmaking
Internet traffic tax, aka brain drain guarantee.

~~~
JTon
Other commenters are saying there's a 700 HUF (2.2 EUR) cap for residential
lines. I don't think people will be leaving the country en mass because of
that

------
imaginenore
Does anybody know how to make the server execute "git pull" once I push the
code from my local machine?

I see some convoluted tutorials that involve setting up certificates and such,
I wonder if there's an easier way.

------
dzhiurgis
I think the only thing surprising about this is that it happened sooner than
later. Eventually we will see more states imposing taxes on information.

In a sense, if they gave you free education and you used that education to
create new information, then they own a certain stake in it.

Just like sales tax is used to subsidise or oversee certain business, data tax
will be used fund cyber policing, censorship and such. Also, it may ensure
that we don't drown ourselves into pointless data. Just like businesses are
forced to engage in certain activities (typically innovative) that can
generate certain markup for the whole system to be sustainable.

~~~
jnbiche
>In a sense, if they gave you free education and you used that education to
create new information, then they own a certain stake in it.

What?! Does that mean the local water company owns a stake as well? I mean, I
couldn't have possibly survived to receive that education without a source of
clean water, right?

And what about the people who didn't receive a state-supported education (ie,
private schools and home schooling). Are they exempt from this tax of yours?

~~~
fexl
Not only that, they took a lot of money in exchange for that "free" eduction
-- often from people who didn't even use the service. So no, they don't have a
"stake" in the products of anyone's mind. That's repugnant.

~~~
dzhiurgis
It is and I am not arguing for it, just merely accepting it and looking from
the point of view the government thinks.

~~~
e7620
What government are you talking about? Does "free" education implies the
obligation to give all your life work output to the government? This seems
very foreign, please name at least one country that implements those ideas.

~~~
dzhiurgis
I was merely speculating, but I think Hungary might set the precedent.

Alternatively, whenever you buy storage media (DVD-R, HDD) there is a
surcharge that goes to authors. That's all done on the premise that this media
will be used for piracy.

You already pay tax on information when you watch Netflix or licence a patent.

Also I did not say give it all to government.

