Hungary’s Anti-NGO Tax Law Violates Free Speech and Freedom of Association
By Daniela Ikawa
It is a long way from the angry street protests that have unfolded over the past few nights in the Hungarian capital, Budapest, to the Baroque splendor of the halls of the Scuola Grande di San Giovanni Evangelista in Venice.
But over the past weekend, as demonstrators gathered outside Hungary’s state-owned broadcaster in Budapest, the 117th plenary session of the Venice Commission at the Scuola Grande was wrapping up with its own forthright challenge to the Hungarian government of Prime Minister Viktor Orban.
The senior judges and jurists who form the Commission are drawn from 61 different states—47 of them members of the Council of Europe—which established the body to provide its members and other states with legal advice on “democracy, human rights, and the rule of law.”
The agenda at the just-concluded session included adoption of a legal opinion on one of Orban’s most high profile efforts to intimidate and suppress the work of independent nongovernmental organizations (NGOs) in Hungary—a 25 percent tax created in August to be imposed on groups that “support immigration.”
The new tax provision—added by Section 253 of Act XLI of 2018—entered into force in August 2018, and imposes the tax on “financial support of an immigration supporting activity” in Hungary, and “financial support to the operations of an organization with a seat in Hungary that carries out activities to promote migration.”
In its findings [PDF], the Commission concluded that Hungary should repeal the law on the grounds that it violates the rights to freedom of expression and freedom of association of NGOs, rights that are guaranteed by Articles 10 and 11 of the European Convention on Human Rights. It stated that:
[T]he effect of the legislation introducing the special immigration tax represents an unnecessary and disproportionate restriction of the associations’ freedom to determine their objectives and activities and therefore a disproportionate interference with their right to freedom of association. The special tax represents moreover an unjustified interference with the right to freedom of expression of NGOs, since the special tax limits their ability to undertake research, education and advocacy on issues of public debate.
In its opinion, the Venice Commission stated that it held “serious concerns about the legitimacy” of Section 253’s aims. It highlighted that measures “should not be used to hinder the freedom of association of groups disliked by the authorities or advocating ideas that the authorities would like to suppress.” Therefore, “taxes shall not be imposed for the purposes, or have the effect of dissuading persons, including legal persons, from lawfully advocating along a particular political or societal point of view.”
The Commission also stressed that the 25 percent tax is vaguely drafted, with references to “activities that indirectly aim at promoting migration,” “carrying out media campaigns,” and “building and operating networks,” which lack clear guidance as to when an organization becomes liable under the tax. According to the Commission, “the vagueness of the terms used in Section 253 may also create a chilling effect on legitimate activities of civil society organizations.”
Finally, the Venice Commission underscored that this new tax provision should be analyzed in light of other recent laws, which have imposed restrictions to associations, including a 2017 law stigmatizing organizations that receive foreign funding, and a 2018 law that makes it a criminal offense to provide legal aid to refugees and migrants seeking asylum.
Importantly, the Commission notes that donors have a right to give funds to NGOs, subject to legitimate restrictions, as a component of both freedom of association and freedom of expression. This is the first time that the Venice Commission, the European Court of Human Rights, or any other body that gives legal opinions has acknowledged this vital principle.
Regrettably, the Venice Commission’s comprehensive rejection of the new tax law is unlikely to lead to any change in the law’s status—Hungary has ignored similar opinions in the past.
But it will strengthen arguments against the law at the European Court of Human Rights, where the Open Society Foundations and the Hungarian Helsinki Committee have filed separate challenges to the 25 percent tax law.
It also significantly strengthens the legal arguments against Hungary within the European Union—the international body which in theory at least has the power to respond to Hungary’s attacks on European values and human rights with a range of sanctions.
Daniela Ikawa is a legal officer for freedom of assembly and association with the Open Society Justice Initiative.