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[budapest] One of the measures the ad industry fears the most-taxes on advertising-has come to Hungary. A 1% tax on media companies' ad revenues approved by the Hungarian Parliament went into effect April 27.

The only exception is a lower rate of 0.5% for publishers, negotiated in fierce lobbying by publishers who protested that they already pay a 1% tax levied on income from the cover price of publications. (Publishers of pornography pay a higher rate of 20% of cover price income.)

Revenues from the new tax will support the National Cultural Fund, Hungary's institution for endowment of the arts. No additional taxes are expected to be imposed on Hungary's $320 million ad industry.

Peter Nagy, secretary of Hungary's Advertising Association, said that the tax will complicate the accounts of ad agencies and media companies that already have set annual advertising rates and will not be able to generate additional revenue from clients.

Janos Peto, general secretary of the Hungarian Newspaper Publishers Association, said that although the new tax is not expected to cut the amount of advertis-ing, it could result in higher rates and increased inflation.

He said the association does not oppose supporting culture, but rather how "the government is trying to collect the money. .*.*. To subsidize culture is everybody's task-all companies."

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