MPs: Government should scrap broadband tax

 

Gallery

By Barry Collins

Posted on 23 Feb 2010 at 08:54

A committee of MPs has called for the Government’s proposed 50p “broadband tax” to be scrapped.

The 50p per month levy is designed to bring next-generation broadband to the vast majority of the country, but the Business, Innovation and Skills Committee warns that the tax is “ill-directed” and “regressive”.

The cross-party committee warns that the tax will largely benefit the richer members of society, who are generally more willing to pay for high-speed broadband. “We believe that a 50 pence levy placed on fixed telecommunication lines is an ill-directed charge,” the committee reports. “It will place a disproportionate cost on a majority who will not, or are unable to, reap the benefits of that charge.

“The levy is a regressive tax under which a minority of users will receive enhancements to their services paid for by a majority who appear unlikely to access these services. The Government must look again at this proposal.”

The committee took evidence from a small selection of ISPs, including TalkTalk, which repeated its long-held argument that throwing public funds at next-gen broadband would be a waste of money, “with operators delaying the network rollout so that they tap into public funding… as a result much of the public money will not create new investment but be simply wasted funding projects that were going to happen anyway.”

Money ring-fenced?

Either the levy will be hypothecated or not, and the Government needs to give clarity on this

The MPs also raised concerns over whether the broadband tax would be ring-fenced purely for investment in next-gen networks, or merely added to the general taxation pool. The committee criticised a response from the Department of Business, Innovation and Skills (BIS), which said that “We expect the amount raised by the landline duty to be made available for the delivery of the NGA [Next Generation Access] objectives through the Next Generation Fund,” but warned that “few taxes are formally ring-fenced”.

“We find this a somewhat Delphic response,” the MPs stated. “Either the levy will be hypothecated or not, and the Government needs to give clarity on this before it brings proposals before the House to introduce the levy.”