Hungary's EU presidency, already clouded by a press freedom row, stumbled further on its first working day when the European Commission said it was investigating the legality of "crisis taxes" imposed by the centre-right government. The Commission said on Monday it was looking into the special taxes on the telecoms, retail and energy sectors, as well as complaints by a number of affected foreign companies.
It was the latest in a series of conflicts between Hungary and the European Union since Prime Minister Viktor Orban rejected austerity measures, cut ties with the International Monetary Fund and opted for unorthodox fiscal steps to cut the budget deficit and boost economic growth. Several EU countries have condemned a new Hungarian media law which took effect on January 1. That prompted Budapest, which inherited the bloc's six-month rotating presidency the same day, to hit back on Monday at what it called "unfounded, at times outright absurd accusations".
German Economics Minister Rainer Bruederle added his voice on Monday to those of 15 foreign firms - including Dutch-based finance group ING, German utility RWE AG, Deutsche Telekom AG and Austrian energy group OMV AG - whose chief executives wrote to Brussels last month to condemn the windfall taxes.
European Commission spokesman Olivier Bailly said the Commission had written to the Hungarian government in October asking for information, and had received a response even before the companies sent their complaint. "We are now looking at the formal complaint and the letter from the Hungarian government," Bailly told reporters. The companies said the Hungarian government's decisions showed "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," they said. Germany's Bruederle told Sueddeutsche Zeitung: "Taxes that are primarily directed at foreign companies are problematic in principle in the European internal market."
The levies on the energy, telecommunications and retail sectors are due to raise 161 billion forints ($809 million) this year alone. The one-off taxes are due to expire by 2013. It was not clear whether the Commission was also investigating the legality of a financial sector tax, expected to produce 200 billion forints in revenue this year. In the past weeks, Hungary's new media law has drawn unusual public rebukes from Britain, Germany and Luxembourg, whose foreign minister openly questioned last week whether Hungary was worthy of leading the EU.
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