The European Union on Tuesday denounced Hungary's plan for an Internet tax as a new threat to political freedom in the country and also for broader EU economic growth.

EU digital commissioner Neelie Kroes believes it is a "particularly bad idea" and will continue to support protests like those against the proposed levy held Sunday in Budapest, her spokesman Ryan Heath said.

The proposal has to "be seen as part of that pattern of actions which have limited freedoms," Heath told reporters in Brussels.

He was referring to the government of Hungarian Prime Minister Viktor Oban, which has cracked down on media regulation and the justice system.

"If Hungary becomes a precedent in this instance, it can become a problem in a lot of other member states and become a problem for Europe's wider economic growth," Heath said.

"The digital part of the economy is probably the main thing keeping Europe out of recession right now," he said.

"So taxing that in a country that is already below the average on digital indicators is a particularly bad idea," Heath said.

The proposed levy also flies in the face of personal efforts by Kroes over the last five years to promote the digital economy across Europe, Heath said. Her mandate ends October 31.

Announcing the levy a week ago, Economy Minister Mihaly Varga said the tax -- 150 forints (0.50 euros, $0.61) on each transferred gigabyte of data -- was needed to help shore up the 2015 budget.

Orban has been accused of leaning toward authoritarianism and protest organisers told AFP they believed the tax was aimed at restricting government critics who mainly use online media.

Others are concerned it will hurt small businesses and make it harder for people, particularly in poor areas, to access information and educational material.