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European media watchdog urges Hungary to rethink ad tax, says it may hurt media pluralism

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BUDAPEST, Hungary - Hungary should reconsider its new tax on media advertising revenues because it could damage media diversity, a European media watchdog said Friday.

The tax approved by lawmakers Wednesday hits Hungarian media companies' annual advertising revenues in several steps, rising to a maximum rate of 40 per cent on revenues above 20 billion forints ($89 million). The charge comes on top of other standard taxes.

Dunja Mijatovic, the Organization for Security and Cooperation in Europe's representative for press freedom, said she was concerned about the tax.

"It could negatively affect media pluralism and it may harm media freedom in Hungary," Mijatovic told The Associated Press in an email. "The law should be sent back to the Hungarian parliament for further discussions involving all stakeholders."

Prime Minister Viktor Orban said the new tax targeted "extra profits" in the media sector, similar to earlier taxes on banks, telecommunications companies and others.

"We will collect 9 to 10 billion forints ($40-$44 million) from a big sector which works with very large profits," Orban said Friday on state radio.

Media experts say the law targets RTL Klub, the country's largest broadcaster and the ratings leader over TV2, which was recently bought by executives widely reported to have links to business interests close to Orban's Fidesz party.

"The law is designed to hurt the country's most powerful media company, perhaps because it is a potential danger to the overriding government narrative on all other media," said Peter Nadori, chairman of the Association of Hungarian Content Providers.

That view was strengthened by a last-minute amendment to the law allowing TV2 and other loss-making media to reduce their tax payments.

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