EU questions Hungary as presidency opens

 

HUNGARY IS on the defensive just days into its six-month EU presidency, after Brussels queried its controversial “crisis taxes” and a tough new media law.

Since taking power last spring, prime minister Viktor Orban and his ruling Fidesz party have used their two-thirds majority in parliament to place allies at the head of most key institutions, strip powers from the constitutional court and tinker with the constitution. They have also abolished an independent budgetary council that monitored state spending.

The government has pushed through windfall taxes of hundreds of millions of euros on the financial, energy, telecommunications and retail sectors, in a bid to plug holes in Hungary’s budget without raising income tax.

The heads of 13 major foreign firms sent a letter last month to European Commission president José Manuel Barroso, accusing Hungary of displaying “a trend towards using selected sectors and foreign companies in particular to balance the state budget”.

“This harms investments as well as the credibility in Hungary’s commitment to the European internal market,” said the letter, which was signed by chief executives of firms including Dutch-based bank ING, German utility RWE, Deutsche Telekom and Austrian energy firm OMV.

Germany’s economy minister Rainer Bruederle said yesterday that the “taxes that predominantly affect foreign companies are fundamentally a problem for the internal European market”.

European Commission spokesman Olivier Bailly said Brussels had asked Budapest for more information on the law when it was passed in October and was now studying its response and the companies’ complaint.

“We don’t have problems with budgetary and fiscal decisions taken by member states in order to consolidate and balance their budgets,” he said, adding that there were “principles of equality regarding tax within community rules according to which it is not possible to tax operators of one sector more heavily than others”.

Mr Bailly also revealed that European Commission vice-president Neelie Kroes had sent a letter to Hungary voicing “concerns” about a media law that would be enforced by a new council staffed entirely by government loyalists.

The council will have the power to levy very large fines on publications, websites and broadcasters whose coverage is deemed to be unbalanced or in breach of guidelines on taste and decency. It will also be able to force reporters to reveal their sources in cases that are deemed to involve national security or public safety.

The front page of yesterday’s left-wing Nepszabadsag newspaper in Hungary carried the statement, in 23 EU languages: “The freedom of the press in Hungary is coming to an end”.

Hungary’s government insisted, however, that the new law “complies with the relevant EU standards in all respects” and complained that critics “apparently lack in-depth knowledge” of the act’s text.

“Instead of formulating specific criticisms, they are a collection of unfounded, at times outright absurd accusations. The Hungarian government remains committed to freedom of the press and in no way wishes to stifle the opposition’s views,” it said.