Imposing a tax on Hungarian media companies with low turnover, such as newspaper publishers, will challenge their very survival, it said, adding that taxing self-advertisements would affect all companies operating in Hungary.

Cabinet chief János Lázár said earlier that he proposed reducing the higher rates of the ad tax and introducing a single band for the levy, saying more companies would pay less tax so revenues flowing into the treasury would not necessarily decline. He would not reveal the level of the tax at this stage, though he referred to the Austrian 5% tax rate several times.

The association said that Lázár’s remarks suggested that the tax would affect not only media companies but traders and service providers, Hungarian producers and retail chains.

This would mean price increases in the short term, bumping up inflation, reducing demand and stifling economic output. The association noted that a study prepared on the advertisement tax by OECD in 2014 clearly showed several negative consequences.

For instance, in neighbouring Austria where a 5% flat tax is in force, the number of media participants dropped by 17.5% after the introduction of the tax, it added.

Source www.hungarymatters.hu

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