France and Spain were already in the European Commission's sights and have now been referred to the EU Court of Justice for refusing to abolish their telecoms tax', levied in both countries to compensate for the loss of earnings resulting from the discontinuation of paid advertising on public television. On 13 March, the Commission also opened an infringement case against Hungary, which applies a similar tax to bolster its tax revenues.
A telecoms tax was introduced in France in March 2009, another in Spain in September of the same year and a third in Hungary a year later: in all three cases, EU telecoms sector rules are overtly breached, according to the Commission, which is tracking down such practices. It argues that Directive 2002/20/EC on the authorisation of electronic communications networks and services is very precise: "such charges should be limited to cover the actual administrative costs" of the national regulatory authority - which is by no means the case here.
In the case of France, the tax came into effect after the government decided to abolish paid advertising on all France Televisions channels after 20:00, a flagship measure by President Nicolas Sarkozy. It was originally intended to extend it to daytime programming as well, but in the end the measure stopped there. The tax amounts to 0.9% of telecoms operators' total turnover in excess of 5 million. This new tax paid to the French state is expected to bring in around 400 million a year.
The Spanish legislation is based on similar logic: a tax of 0.9% on telecoms operators' gross earnings as a result of the abolition of all advertising on public radio and television channels. A few operators were spared due to the geographical scope and type of telecoms services they provide. The tax is expected to raise 230 million in 2010.
Both taxes were found illegal by the Commission, in July 2010, and the executive sent a final warning to both states, in October. Paris and Madrid were given two months to abolish the taxes, "but they are still in place," regrets the Commission. France and Spain apparently prefer to argue the case for their taxes before the EU court. "There is a real problem of law on the scope of the authorisation directive and it is our view that the Commission is going beyond this scope," notes a French diplomatic source, who adds that taxation is an area subject to unanimity of the member states.
The Commission is also tackling Hungary's special tax' on telecoms. The tax also concerns retail trade and energy and is meant to boost the country's tax revenues. In a request for information sent to Budapest, the Commission expresses its concerns about the compatibility of the tax with the EU's telecoms legislation. For telecoms operators, the tax rates vary between 0% and 6.5% based on gross earnings (excluding VAT). The Hungarian government hopes to raise 220 million a year with the measure. Operators have already paid the tax for 2010. If Hungary's explanations fail to convince the Commission, Budapest also risks a referral to the EU court.
The former telecoms monopolies are very pleased with the Commission's doggedness, in any case. Their European association, ETNO, argues that taxes like those levied in Spain, France and Hungary place a "heavy burden" on a sector that is supposed to be a driver of growth and employment. These measures risk hampering its capacity to invest in high-speed internet connections and endangering the EU's targets for coverage by 2020.
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