EU and Hungary to go to European Court on telco tax

The European Commission has found Hungary's surtax on the telecom sector in breach of EU regulations but the Hungarian government says it will not revoke the tax and is willing to defend it before the European Court of Justice where the Commission is likely to take the case.

A press release the European Commission on Thursday says Brussels requested Hungary to abolish the special surtax on telecom service operators. "The Commission considers this tax illegal under EU telecoms rules because revenue from the taxes is used for the Government's central budget and not for meeting the specific costs of regulating the telecoms sector," the statement points out.

Hungary's case is by no means unique, the Commission has taken similar steps against France and Spain. As concerns other industry-specific taxes, Spokesperson for the EU's Competition Commission Jonathan Todd says investigations are currently underway and no information is yet available on the outcome.

One further complaint which attracted EU criticism of Hungary is that the government has failed to consult interested parties before amending charges levied on telecom service providers. Hungary is required to inform the Commission within two months of proposed measures to ensure compliance with EU telecommunications regulations. If the government fails to do so, the Commission may refer the case to the EU Court of Justice.

That is likely to be the case since the Hungarian government's prompt response is that it sees no reason to revoke this tax and is ready to defend its stance before the European Court of Justice. A statement by Prime Ministerial spokesman Péter Szijjártó does not refer to the specific charges worded by the Commission but cites the government's argument that "these companies should also be given the chance to take their share in proportionate burden sharing."