Hungary to scrap controversial 'crisis' taxes

(BUDAPEST) - Hungary announced late Wednesday that it will do away with controversial "crisis taxes" on the retail and telecommunications sectors from January 2013, after the European Union (EU) called for them to be scrapped.

"The Hungarian government, independent of this (EU) request and acting on an earlier decision, will stop in its entirety the temporary special taxes levied on certain sectors -- retail and telecommunications -- from January 1, 2013," the government said in a statement posted on its website.

Earlier on Wednesday, the European Commission had formally called on Hungary to amend the special levies, which it called "discriminatory" as they disproportionately affect non-Hungarian operators.

The Commission said Hungary had two months to conform with European Union law within the framework of infringement proceedings involving the taxes, and warned that non-compliance could lead to a case being brought before the EU's Court of Justice.

"The Commission is banging on an open door," Budapest responded in its statement, emphasising that the decision to eliminate the taxes was not a response to Brussels's request.

Hungarian officials also argued that the regulations currently in force were in line with EU law.

Meanwhile, a revenue-based tax levied by Hungary on the banking sector that had also been introduced as a temporary "crisis tax" was made permanent at its 2013 level as part of a package of fiscal adjustment measures announced by the economy ministry on Friday.