People noticed. On Sunday, thousands of people took to the streets of Budapest to protest. Protesters took outdated electrical equipment to the headquarters of the ruling Fidesz party, with Bloomberg News reporting that some threw "monitors and keyboards" at the building. Hungary's government seemed taken aback by the protests and attempted to water down the proposal, imposing a limit on the level of tax. Yet it wasn't enough for protesters, a estimated 100,000 of whom headed out to the streets again Tuesday, demanding more concessions.
Hungary's Internet tax has touched a cord with the wider world, becoming a subject of mockery and disgust in equal measure: The European Union, of which Hungary is a member, has slammed it as a "particularly bad idea." So what exactly was the government of Hungary thinking with the tax? It's simple, Charles Gati, senior research professor of European and Eurasian studies at Johns Hopkins School of Advanced International Studies explains to WorldViews. "They felt extremely confident," Gati says. "I would say overconfident."
To understand that confidence, you have to understand the broader situation within Hungary and the extraordinary political momentum of Fidesz and its prime minister, Viktor Orbán.
Orbán has been in power since 2010, and earlier this year he was voted back into power with a two-thirds majority in parliamentary elections. Although critics have accused the party of tilting election rules in its favor, few would disagree that Fidesz is by far the most popular party in the country.
The party's success is built on a center right-populism that has rankled many abroad. The Hungarian government has been accused of weakening civil society by weakening the country's judiciary and clamping down on independent media, even lashing out at Norway for giving grants to Hungarian non-governmental organizations. Orbán been clear about his vision for Hungary: In July, he gave a now-notorious speech that said he was hoping to build a country that would be an "illiberal state, a non-liberal state."
Among the populist policies taken by Orbán was a series of unorthodox tax measures, dubbed "Orbánomics." The crux of these policies has been a shifting of the tax burden away from income tax (Hungarians pay a flat tax of just 16 percent) and into other areas: In particular, certain industries (notably banking and telecoms) pay high sector-wide tax, a move that many interpreted as an attack of foreign businesses.
The tax on the Internet would clearly fit into the world of Orbánomics -- another unorthodox attempt to raise money that doesn't hit consumers directly. The Hungarian government has imposed similar taxes on the telephone network and text messages, for example. It may be a rather desperate attempt to boost tax revenue, which critics say is in a far worse off state that Hungary would let on. "If the deficit is not under 3 percent, the European Union may reimpose the excessive deficit procedure, which may lead to a withholding of E.U. funds," Eva S. Balogh, a former Yale professor who runs the blog Hungarian Spectrum, points out.
However, the tax doesn't appear to have been well thought out. For one thing, there's its cost. As my colleague Nancy Scola has pointed out, the Hungary already has high costs for Internet access. The Internet tax as it was originally planned would have made it far worse.
"The original proposal was put together by someone who had no knowledge of computer technology and as a result the tax per gigabyte was so high that an average user would have had to spend almost half his salary on this Internet tax," Balogh says, pointing out that even the watered down law is a lot. "Now there is an amendment in place that would put a cap on the tax, but according to some calculations it still adds up to about $40.00 tax/month. That is hefty even by American standards."
Perhaps even more problematically, by targeting the Internet after clamping down on the press and broadcast media, the Hungarian government appears to be targeting the one relatively open sphere of the media left, inciting the opposition. "The Internet tax is a symbol of the government autocracy," Zsolt Varady, an Internet entrepreneur who organized the protests on Facebook, told the crowd on Tuesday night.
Gati is quick to point out that Orbán and Fidesz remain very popular. "This is not a revolution, lets not get carried away here," he says. But still, the Internet tax protests are an unprecedented display of dissent against Orbán, and it comes at a time when Fidesz is feeling especially threatened by the international community: Earlier this month the United States denied six visas to Hungarian public officials who were suspected of corruption, a truly remarkable diplomatic fracas between two NATO allies.
Exactly how Orbán's government will respond remains unclear: The Hungarian prime minister's vision of governance is frequently compared to Russia's President Vladimir Putin, a long-running leader known for his savvy master of manipulation. "Viktor Orbán never backs down. It is not in his nature. He thinks he is invincible, and so far he has been," Balogh says.
"But eventually there comes a tipping point," she adds, "which might be now or very soon."