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Taxing Information Consumption Is Not Necessarily Evil?

Tamás Székely 2014.10.29.

Berlin-based writer Leonid Bershidsky, wrote an article for bloombergview.com, claiming that Hungarian government’s plan to tax internet might be reasonable in a way. Bershidsky says, that although internet is often regarded as a sacred cow which should be exempt from taxation, the move was largely consistent with the consuming-oriented tax-policy Viktor Orbán’s government has pursued since coming to power in 2010.

Bershidsky notes, that under the draft legislation starting next year, Hungarians would have paid 150 forints (0.5 EUR) per gigabyte of data consumed with a cap of 700 HUF (2.3 EUR) per month. At the same time Hungarians pay a flat income tax of only 16 percent, and the country’s corporate tax rate is fixed at 19 percent (less for small businesses). But Hungary’s value-added tax is 27 percent, the highest in Europe, and special taxes have been imposed on specific industries — including banking, advertising and telecommunications, which are dominated by foreign players. Telecom operators pay per minute of voice calling and per text message. From the government’s point of view, as the Internet comes to dominate those services, it should share the tax burden, too.

Bershidsky draws the conclusion: “If governments choose to tax consumption in general — and most of them do, through value-added or sales taxes — it’s logical to tax data consumption, too. There is no reason why a society that accepts taxation of traditional telephony should reject levies on Internet traffic.” The infrastructure that carries it is physical and not limitless, and taxing heavy consumption could be a way to preserve net neutrality, he added. Leonid Bershidsky admits, that to consumers, these arguments might sound like government rationalization. However, there’s one reason that he believes heavy internet use should be taxed, progressively, if possible.  He says, it would force technology companies to develop ways to minimize traffic and perhaps push the Internet’s technological development toward decentralized, mesh-based communication.

via bloombergview.com photo: public domain


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