Hungary spurns EU call to end 'illegal' tax

(BUDAPEST) - Cash-strapped Hungary on Thursday refused to end a special telecoms tax despite the European Commission saying it broke European Union rules.

"There is no reason to change" the tax, and Hungary is prepared to go to the European Court of Justice to defend its rights, Prime Minister Viktor Orban's spokesman Peter Szijjarto said in a statement.

"The tax provides an opportunity to companies to have a proportionate share in shouldering the social burden."

Earlier Thursday Brussels said the levy, which brings in 61 billion forints (209 million euros, $285-million) annually, was "illegal" and gave Budapest two months to comply.

It said the levy went to the government's central budget, not for meeting the specific costs of regulating the telecoms sector, and that authorities failed to consult the sector properly beforehand.

Orban, who is looking to introduce even tougher austerity cuts to meet his deficit targets, introduced the "crisis tax" of 6.5 percent of gross revenue on retail, energy, financial and telecoms firms in October 2010.