The Hungarian government introduced a bill that would implement a tax upon Internet traffic. At a price of 150 forints/GB (60 US cents/GB), Hungary could become the first and only country in the world where basic web services such as YouTube or Skype are not free.
Hungary makes up for its low corporate tax rate (19%) with a combination of regressive consumption taxes and an extremely high value-added tax (VAT) of 27%. Seeking even more revenue to bolster the recovering economy, Hungarian Prime Minister Viktor Orban has turned his attention towards digital taxation. Taxing the Internet opens the door for higher taxes or further regulation of a fundamentally open means of communication.
Additionally, Hungary has run into problems with free media, raising taxes this summer on non-government owned press outlets. This sparked protests and accusations that the government was seeking to silence or dissuade public opinion. A tax on the Internet would further serve to limit free speech and mass communication by anti-government groups.
A 60 cents per GB tax on Internet traffic does not sound like much, but it is the inception of another crutch for the government. Once the government begins taxing the Internet, they will only seek to expand this tax. Limiting access to the Internet through taxation can only lead to lowered innovation and lessened creativity.
American lawmakers should be concerned that an Internet access tax, like so many other European exports (welfare state, publicly funded health care), could find its way to the United States. America’s digital liberty has allowed it to become an e-commerce leader. Threats such as this proposed tax in Hungary harm freedom and an open Internet throughout the world.