Category Archives: advertising tax

The Big Gun Swings into Action

June 22, 2014 By in advertising tax, Mészáros, media, Vajna Leave a comment

DownloadedFileOn June 11, 2014, the commercial television-station RTL Klub launched an offensive of negative news against the Orbán administration just hours after the National Assembly approved Fidesz-sponsored legislation to tax advertising revenue.

Fidesz designed the progressive tax so that RTL Klub—one of the two most popular television stations in Hungary and the country’s biggest generator of advertising  income—would pay an estimated 63 percent of the total amount of government revenue from the tax in 2014 (see Black Screen of Protest).

Although RTL Klub had gone to great lengths to avoid offending Fidesz before the party adopted the tax on advertisng revenue, the Orbán government has long wanted to curtail the popularity of the German-owned station, which broadcasts mainly action movies and cheap serials, as a means of increasing the viewership of the state-run television stations, which broadcast mainly pro-government news and Hungarian culture.

Fidesz National Assembly Caucus Deputy Chairman Gergély Gulyás said that imposing the bulk of the tax on RTL Klub is justifiable on the grounds that the station “causes great social harm,” referring to the levy as a type of sumptuary tax (egészségügyi termékadó)—that is, a sin tax (source in Hungarian).

The unprecedented RTL Klub negative-news offensive against the Orbán administration has so far focused on the issue of nepotism—on those who have gained unfair advantage and preferential treatment as a result of their close relations to the prime minister. Here is an Orange Files chronology of the main items of negative news regarding the Orbán administration that RTL Klub has broadcast on its Evening Edition (Esti kiadás) news program as part of this offensive in its first ten days:

June 11

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Screenshot from RTL Klub June 11 broadcast.

Subject: The enormous wealth that businessman Lőrinc Mészáros—the mayor of the village of Felcsút where Viktor Orbán grew up and a personal friend of the prime minister—has attained since Fidesz returned to power in 2010 (source in Hungarian).

Claims: The Felcsút mayor’s company, Mészáros and Mészáros, has generated a 500-fold increase in revenue since 2006, making him the 88th richest man in Hungary; that he won more than 1,000 hectares of land in state tenders in 2011 and 2012; and that his friends, relatives and business partners won licenses to operate National Tobacco Shops at 19 of the 21 Auchan supermarkets in Hungary under the state monopoly on the retail sale of tobacco that the Orbán administration imposed in 2013.

Quotes: “No doubt almighty God and the person of Orbán Viktor have played a role in my getting to where I am today” (from interview published in the pro-government weekly Heti Válasz).

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Screenshot from RTL Klub June 13 broadcast.

June 13

Subject: The investigation that the Democratic Coalition opposition party has launched into state companies that have done business with the dolomite-mining company of Prime Minister Viktor Orbán’s father, Győző Orbán (source in Hungarian).

Claims: Győző Orbán’s company, Dolomit Ltd, has paid dividends of one-billion forints since the start of the global financial crisis and had revenue of 1.9 billion forints in 2013.

June 15

Subject: The appointment of the prime minister’s personal advisor on sports-related issues, Mihály Takács, to serve as the new director of the Ferenc Puskás Football Academy that Prime Minister Orbán founded in his home village of Felcsút in 2006 (source in Hungarian).  

Claims: Takács, who has been friends with the prime minster since they played football together on the FC Felcsút club, receives a salary of 650,000 forints per month as the prime minister’s sports advisor.

Quotes: “Since April, it [the Ferenc Puskás Football Academy] has had a new stadium as well: the Pancho Aréna with seating capacity of 3,900, here in Felcsút, right next to Viktor Orbán’s summer home” (see One Man’s Plaything).

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Screenshot from RTL Klub June 16 broadcast.

June 16

Subject: The lucrative state licenses that a company under the majority ownership of Hungarian-American film producer Andy Vajna, who serves as Orbán government commissioner in charge of renewal of the film industry (filmipar megújításáért felelős kormánybiztos), won to operate casinos in Budapest and Pest County.

Claims: Vajna, who is primarily known for having produced the Rambo and Terminator movies, won five of the seven ten-year licenses that the government recently issued to operate casinos in Hungary though his company, Las Vegas Casinos.

June 17

Subject: The inquiry that the National Investigative Office (Nemzeti Nyomozó Iroda), Hungary’s equivalent to the FBI, has conducted regarding the theft of two smart phones from Prime Minister Orbán’s daughter, Ráhel, during her September 2013 wedding.

Claims: The National Investigative Office has spent 4 million forints to take DNA samples from 26 people as part of the probe, sixteen times the 250,000-forint market value of the phones.

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Screenshot from RTL Klub June 18 broadcast.

June 18

Subject: The official visit of President Gurbanguly Berdimuhamedow of Turkmenistan to Hungary (source in Hungarian).

Quotes: “Today the president of the republic received one of the biggest dictators in the world, according to human-rights activists.” And:  “Human rights are violated in the country [Turkmenistan] every single day. There is no commercial media and only positive news can be reported on state-run channels.”

June 19

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Screenshot from RTL Klub June 19 broadcast.

Subject: The newly released wealth statement of the previously mentioned businessman and mayor of Felcsút, Lőrinc Mészáros (source in Hungarian).  

Claims: According to the wealth statement, the “former gas fitter” and “Viktor Orbán’s good friend” has 400 million forints in his savings account and 20 million forints in cash. The amount of money in Mészáros’s personal bank account has grown from one-million forints in 2011, 20 million forints in 2012 and 200 million forints in 2013. The statement furthermore indicates that Mészáros owns 40 separate pieces of land in Hungary.

June 20

Subject: The emergence of evidence showing that Interior Ministry law-enforcement State Secretary László Tasnádi worked as a domestic-intelligence agent during the late communist-era.

Claims:  Tasnádi was present as an undercover agent at the ceremony marking the reburial of 1956 Hungarian Revolution prime minister Imre Nagy in Budapest on June 16, 1989 at which Viktor Orbán gave the speech that gained him national recognition and solidified his leadership over the newly founded Fidesz party (see Fill in the Blanks).

Government Reaction

The Orbán government has reacted very sensitively to these RTL Klub reports. Following the June 13 exposé on the financial gains that Győző Orbán’s company has recorded over the past years, the Prime Minister’s Office released the following statement (source in Hungarian):

In the opinion of the government, it is improper for RTL Klub to launch a campaign of revenenge because it has to pay taxes in Hungary. It is completely unacceptable that it wants to take revenge on the family members of cabinet members [a kormánytagok családtagjain] for this reason.

RTL Klub quickly responded to this statement, noting that it suggests that RTL Klub does not pay taxes, when in fact the station paid 8.9 billion forints in taxes last year (source in Hungarian).

On June 20, the Prime Ministry issued another communiqué entitled “RTL Klub Regards Hungary as a Colony” containing an inteview with the government minister who heads the office, János Lázár, in which he makes the claim stated in the title and refers to the station as a “corrupt enterprise.”

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RTL Klub’s negative-news offensive signals first instance in which one of the popular news media in Hungary has expressed explicit and prolonged criticism of the Orbán government since it came to power in 2010. Moreover, RTL Klub has based its offensive not on abstract matters related to democracy and fundamental rights that interest very few people, but on an issue to which average Hungarians are extremely sensitive—that of gaining unfair access to wealth and power as a result of inside connections to government officials. 

The Orbán government has virtually ignored attacks of both types from opposition political forces and media, because it knows that essentially only a few thousand members of the Budapest liberal intelligentsia listen to them (see A Few Thousand Malcontents). However, the government is almost certain use every means at its disposal in order to neutralize the current RTL Klub negative-news offensive, including repressive measures that will serve to further dampen the voice of the independent democratic media in Hungary.   

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A Few Thousand Malcontents

June 9, 2014 By in advertising tax, Lázár, media, narrative, photo gallery Leave a comment
Demonstrators protest alleged Orbán government constraints on the independent media.

Demonstrators protest alleged Orbán government moves to gain control over the independent media.

On Monday, June 9, the opposition website Kettős Mérce [Double Standard] organized a demonstration outside the Hungarian Parliament Building in Budapest to protest the Orbán government’s alleged recent efforts to curb the influence of the independent commercial media in Hungary.

Specifically, Kettős Mérce held the demonstration to voice concern over two issues that emerged last week in this regard: first, the firing of editor-in-chief Gergő Sáling of the moderately opposition news-portal Origo, allegedly as the result of pressure that the Orbán government placed on website owner Magyar Telekom to do so after Origo two weeks previously broke the news that Prime Ministry director János Lázár had accumulated two million forints (6,600 euros) in hotel bills during three secret trips to Switzerland in 2012 and 2013 (source A and B in Hungarian); and Fidesz’s submission of a bill to the National Assembly that would impose a progressive tax on advertising income, one that is manifestly aimed at undermining the most popular commercial television station in Hungary, RTL Klub (see The Black Screen of Protest). 

Orange Files was at the demonstration. 

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Marching across the Chain Bridge.

Marching across the Chain Bridge.

Late as usual and the first glimpse seems to confirm suspicion that two demonstrations in one week about the same issue is too many and attendance will be light, especially considering that it’s really hot outside and also the Pentacost holiday so everybody is just getting home from the first long weekend at Lake Balaton. 

But a look down Constitution Street (Alkotmány utca) shows a surprising number of people—two thousand, maybe even three. Mostly young, sophisticated, fashionable, western. The speaker is from one of the secondary organizers of the demonstration: right there on the stage he makes a call to Magyar Telekom to cancel his mobile-telephone subscription to protest the presumable pressure the company put on Origo to fire chief editor Sáling; then a fiery speaker in a Hawaiian shirt and then a lady who ends to a crescendo of cheering with a long, eclectic list of different types of people who merit representation in an inclusive Hungary—Gypsies, homosexuals, Hungarian minorities from beyond the borders, etc. 

Marching through the Castle Hill tunnel.

Marching through Castle Hill tunnel.

Liberal hearts warmed, the demonstrators march down to the Danube, across the Chain Bridge [Lánchíd] and through the Castle Hill tunnel on their way to the Magyar Telekom headquarters intoning the new slogans: “Free country! Free media!” (Szabad ország! Szabad média!) and “We don’t need Orbán! We don’t need Lázár! The Hungarian People Doesn’t Need an Emperor!” (Nem kell Orbán! Nem kell Lázár! A magyar népnek nem kell császár!). 

Inside the tunnel it is deafeningly loud, terribly hot. Dizzy. Parched. Need a drink bad. 

Down Krisztina Boulevard and arrive to the headquarters. A PR coup: Magyar Telekom has put up tents with free bottled water for the demonstrators. Sit on top of a high wall, quench thirst and look out over the crowd. Several familiar faces— friends, acquaintances, former liberal political figures like Imre Mécs and Tamás Bauer, aging rock star János Bródy. 

The main target of reproach in speeches at this location is János Lázár, the embodiment of cynical and arrogant political power, the man who ostensibly put pressure on Magyar Telekom to fire Sáling, the man who most vociferously and scornfully defended the proposed advertising-revenue tax, the man who will most likely replace Orbán as prime minister when the latter jumps to the position of president in 2017.  

PR coup: Magyar Telekom provides free water to demonstrators.

PMagyar Telekom provides free water to demonstrators.

But you can bet Lázár doesn’t care. Nobody in the Orbán administration does, because they know that twenty-five hundred disgruntled Budapest liberals pose no threat whatsoever to their power and, in fact, may even play the useful role of subjects for the state-run and other pro-government media to portray as perpetual grumblers, people for their supporters to scoff and roll eyes at.

And if they really don’t like it here, let them move to London with all the other malcontents. 

For a few more images of demonstration see Orange Files photo gallery.

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Black Screen of Protest

June 5, 2014 By in advertising tax, media Leave a comment
Politically neutral television station RTL Klub. Estimated 2014 tax payment: 6.7 billion forints.

RTL Klub: “We Protest Against the Advertising Tax.” Estimated 2014 tax payment: 6.7 billion forints.

On June 5, 2014, over 100 commercial television and radio stations, websites and newspapers participated a Hungarian Advertising Federation-organized protest against a bill that Fidesz National Assembly representative László L. Simon submitted earlier in the week calling for the introduction of a progressive tax on advertising revenue (source in Hungarian). Between 7:15 p.m. and 7:30 p.m. on this date many of the commercial television stations and websites taking part in the demonstration showed blackened screens with messages expressing objection to the proposed taxes.

Fidesz previously proposed this tax in 2013, but dropped it presumably because the party did not want to have strained relations with the commercial media during the 2014 National Assembly election campaign. The slightly altered new version of the tax would begin at one percent on advertising revenue over 500 million forints and rise to 4o percent on advertising revenue of over 20 billion forints, or about 66 million euros (source in Hungarian). 

Politically neutral television station TV2. Estimated 2014 tax payment: 2.1 billion forints.

TV2: “We Protest against Introduction of the Advertising Tax. Today we will suspend our broadcast between 7:15 p.m. and 7:30 p.m.” Estimated 2014 tax payment: 2.1 billion forints.

The tax appears to be aimed specifically at undermining RTL Klub, Hungary’s most-watched television station, which although politically neutral, broadcasts the kind of programs—American action movies, lurid serials and reality shows—that Fidesz and the Orbán administration want to roll back in favor of Hungarian nationalist culture. The station, owned indirectly by German mass-media corporation Bertelsmann, would pay an estimated 6.7 billion forints pursuant to the proposed tax in 2014, or about 63 percent of the expected 10.7 billion forints in total government revenue from the tax this year (source in Hungarian). RTL Klub would, in fact, likely be the only media outlet to pay the tax in its two highest brackets of thirty and forty percent. 

RTL Klub announced shortly after Fidesz representative Simon submitted the bill that the proposed tax would threaten the station’s existence and, along with it, that of some of the most popular television programs in Hungary, such as the weeknightly 10-minute soap opera Barátok Közt [Among Friends] and the talent contest X-Faktor (source in Hungarian).

Pro-government television station HírTv. Estimated 2014 tax payment: 429 million forints.

Pro-government television station HírTv: “We Protest against the Introduction of the Advertising Tax.” Estimated 2014 tax payment: 429 million forints.

State Secretary in charge of the Prime Ministry János Lázár responded “RTL is threatening the country and blackmailing viewers and political officials. It would be good if they would practice this at home, in Germany, and not in Hungary” (source in Hungarian). 

Fidesz National Assembly caucus chairman Antal Rogán subsequently announced that the entire party supports the tax, also referring to the protest as “blackmail of political officials” (source in Hungarian). 

Not only opposition media have objected to the proposed advertising tax: pro-government television station HírTv and newspaper Magyar Nemzet also participated in the June 5 protest. 

Fidesz caucus Chairman Rogán suggested that the party may be willing to make some minor changes to the bill, ostensibly to mollify criticism from pro-Fidesz media, though would not consider withdrawing the proposed legislation. 

If the National Assembly adopts the Fidesz-sponsored advertising-tax bill in its present form, RTL Klub  will be severely weakened and may even be forced to cease operations. The proposed tax represents another blatant attempt by the Orbán administration to decrease the influence of the independent commercial media in Hungary, thereby increasing that of the pro-government state-run media.   

Opposition website 444.hu. Estimated 2014 tax payment: n.a.

Opposition website 444.hu: “We Protest against Introduction of the Advertising Tax.” Estimated 2014 tax payment: n.a.

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