Broadband Tax Will Be Higher – If It Happens

The 50p-a-month levy proposed by the government to pay for upgrades to Britain’s broadband network will be higher, once VAT is included – but doubts are being raised over whether it will be imposed at all.

Campaigners against the levy are seizing on the realisation that the levy will in fact be 59p per month, per line as it is subject to VAT – and will also, unsurprisingly, double or triple for homes with multiple lines, according to a report in the Times.

The levy was announced earlier this year, and is planned for a Finance Bill in the new year, but the Conservatives have promised if they are elected they will scrap it. Others are raising doubts that it will ever become law, and arguing that it will actually be counter-productive, resulting in less investment.

“It’s absolute nonsense,” said Andrew Heany, director of strategy and regulation at TalkTalk, a service provider which has criticised other aspects of the government’s broadband strategy. “The last thing we need is the government wading in and saying ‘We know best”.”

Potential investors will wait to see if it happens, so the roll out of faster broadband will be delayed, Heany told the Westminster eForum event in London yesterday. The whole broadband levy only came about because the Treasury refused to use direct tax for it, he said.

“General taxation would be fair and proportionate, but this tax is regressive and hits the poorest people hardest.” Despite the government’s aim for digital inclusion, the broadband tax would mean 100,000 fewer people on the internet, he claimed.

Political uncertainty extends to other aspects of Labour polices coming from Lord Carter’s Digital Britain report, including strategies to provide rural broadband carried out by Stephen Carter earlier this year but, with opposition inside Parliament and outside, others doubt the levy will ever be imposed. “The Carter fund is ambitious,” said Matt Yardley, a partner at analysts Analysys Mason, “but it is uncertain whether it come into being at all”.