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Dáil Éireann Debate, Tuesday - 9 July 2013

Tuesday, 9 July 2013

Questions (176)

Brendan Griffin

Question:

176. Deputy Brendan Griffin asked the Minister for Finance if he continues to monitor the workings and effectiveness of the Hungarian SMS/MMS levy; if he will relay his findings; and if he will make a statement on the matter. [33417/13]

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Written answers

Officials of my Department continue to monitor developments regarding the imposition of an SMS/MMS/mobile call levy in Hungary. I am advised that, since 1 July 2012, publicly available telephone services in Hungary are subject to a tax which is levied on telecommunications service providers and which applies on the initiation of phone calls and the sending of SMS and MMS messages. The tax is levied at the rate of 2 Hungarian Forint (HUF) per minute for initiated phone calls and HUF 2 per message (SMS/MMS) sent, which converts to approximately EUR0.0068, or c. two-thirds of 1 cent. Calls and messages to emergency services and those making charitable donations are exempt from the levy, as well as the first 10 minutes of calling in each month. The amount of tax payable is capped at HUF 700 (EUR €2.37) per month per phone number for private individuals and HUF 2,500 (EUR€8.47) for non-private individuals.

The levy is set to increase in Hungary from August 1. It is proposed that the telecom tax paid by businesses only will rise by HUF1 per minute or per text message, and the upper limit payable will rise from HUF2,500 to HUF5,000 (EUR €17 approximately). As previously advised, I understand the levy is the subject of European Commission challenge, claiming an infringement of Directive 2002/20/EC on the authorisation of electronic communications networks and services (Authorisation Directive). The action is currently at notification stage and has been responded to by the Hungarian authorities. No information has been made available as yet to my officials regarding behavioural impact of the tax.

As previously advised, the wider social and economic considerations which may militate against the introduction of a further tax on text messages would have to be taken into account, including the fact that that mobile phone calls and text messages are already subject to VAT at 23%, that a levy on such calls and messages could significantly increase the overall rate of taxation on mobile phone accounts, which would have implications for all sectors of society, and, finally, the fact the Exchequer has already received substantial benefit from the industry, particularly in the context of the recent spectrum auction.

In this regard, I am advised by ComReg that the winning bidders of its Multi-band Spectrum Auction for the 800, 900 and 1800 MHz bands will pay €854.64 million for these spectrum rights, comprising firstly of Upfront Fees amounting to €481.7 million (adjusted as necessary by transitional arrangements) and secondly, Annual Spectrum Usage Fees in the amount of €372.95 million which will be adjusted for inflation and paid in instalments until July 2030. Details of Upfront Fees and Spectrum Usage Fees for the duration of licences can be found in Section 2.2.5 of ComReg’s Information Memorandum 12/52, which is available on the ComReg website, www.comreg.ie.

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