Hungary freezes controversial Internet tax after massive protests

Hungarian Prime Minister Viktor Orban froze plans on Friday to impose a tax on Internet traffic in the face of massive street protests and warnings from the European Union that the levy was a mistake.

Opponents of the tax, who said it would have hindered Internet access for consumers already struggling with a faltering economy, described the decision as a major victory for freedom of information in a country many fear is sliding towards autocratic rule. Activists said they believed the tax was aimed at restricting government critics who have a voice in independent, online media.

But Orban's announcement that the tax would be postponed for further consultations was unlikely to end discontent among liberal Hungarians, who accuse him of being an autocrat and are frustrated there is no prospect of removing him until elections in 2018. Recent anti-tax rallies have acted as a catalyst for broader anti-government protests.

"This tax in its current form cannot be introduced," Orban told public radio. "If the people not only dislike something but also consider it unreasonable then it should not be done."

The concession was unexpected from the usually combative Orban. Analysts have observed that Orban may have decided he already had enough contentious issues on his plate.

The U.S. government has barred six people with ties to the government in Hungary, a NATO ally, from entering the United States on allegations they are involved in corruption. Meanwhile, some Western European administrations are concerned that Orban is drifting into the orbit of Russian President Vladimir Putin.

In his four years in power, Orban's government has ordered an audit of civil society groups, has tightened state oversight over the media and slapped costly levies on foreign companies.

The EU and the United States have voiced concerns that Orban, who grew to prominence during his opposition of Communist rule in the 1980s, has acquired too much power and is back-sliding on democracy.

Still, there is no direct challenge to Orban's rule. Most Hungarian voters supported him and his Fidesz party in April parliamentary elections. Fidesz has a two-thirds majority in parliament. There are no national elections for four years, and the Socialists, who were in government before Orban, are in a state of disarray.

Under the proposed Internet tax, service providers would have paid $.60 per gigabyte of data traffic, though it would have also let companies offset corporate income tax against the new levy.

Protesters said they feared the telecoms and Internet firms would pass the cost onto consumers. The government later said the tax would be capped at $2.84 for individuals and $20.29 for companies per month, but the concession did little to quell outrage.

Orban said Friday that the Internet tax plan was not being scrapped altogether. He told public radio the government would start consultations on Internet regulation and potential ways to tax some of the revenue generated online next year.

The tax plan was not likely to have made a significant contribution to bringing down Hungary's budget deficit, which is shrinking. Orban makes many policy decisions himself and has a track record of coming out with radical initiatives with little or no consultation, sources that know him personally say.

“Overall, the law was visibly flawed at several points, and it seemed ill-prepared. It was not an ideological question or a matter of big money," said Tamas Lanczi, chief of Hungary's Szazadveg Political Analysis Center.

"When any government faces an angry population, the best thing it can do is change course."

Al Jazeera and wire services