On 13 June 2016, the Hungarian Parliament accepted a proposal to
amend current transportation regulations (the "Proposal")
and resolved a dispute which arose as a result of Uber's
operations in Hungary. Since the summer of 2014, when Uber started
operating in Budapest, criticisms rained down on the transportation
company. The problem with the current situation is twofold: most
taxi companies are against this new form of transportation
recognising that Uber drivers have an unfair competitive advantage,
resulting from regulatory gaps, and a lack of supervision and
control by the competent authorities thus reducing their
operational costs. The other issue is push-back from Uber. After
the Proposal was accepted, the Hungarian CEO of Uber argued that
"the prohibition or banning of a new technology because it
cannot be implemented into an obsolete regulatory framework cannot
be a direction to follow".
After multiple demonstrations, organised by taxi drivers, the
Hungarian government bowed to the pressure and prepared the
Proposal. According to the Proposal, the National Transport
Authority ("NTA") may order the temporary ban of public
access to websites providing unlawful taxi services. Unlawfulness
in this context means the providing or supporting of personal
transport services on a commercial basis (taxi operator service).
The government's message can be read between the lines:
facilitating personal transport is only allowed through the
standard channels. The temporary ban may be imposed after the NTA
levies a fine against a company which does not fulfil the legal
criteria of personal transport organising. This means that if a
transport organiser who does not own a license for such activity
– one website and a mobile application not sufficing –
could be banned for 365 days.
The timing of the Hungarian National Assembly's decision on
strengthening the rules of personal transport could be seen as a
political message to Brussels. Only a few days passed from the
announcement of the Proposal before an agenda on this topic was
released by the European Commission. The executive body of the EU
expressed the view that different regulations relating to these new
business models could cause fragmentation across EU member states,
resulting in uncertainty both for traditional service providers and
also the new ones. This would hinder innovation, and in the long
term would slow economic growth. Nevertheless, the Commission
pointed out that sharing economy companies will also be paying
taxes as they are part of the economy as are other companies, they
cannot avoid such duty. One way to motivate tax paying is for
member states to provide simple taxation rules. Hungary naturally
argued in favour of banning Uber (together with inter alia:
Belgium, France and the Netherlands).
To summarise, one thing seems to be clear: in the current
regulatory system (regardless of whether we talk about a national
or EU level) there is no effective solution right now. New business
models will always evolve, and Member States will always try to
protect their rightful interests (and their tax incomes).
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