The British government has confirmed it will introduce a tax on phone lines, designed to fund expansion of broadband services across the vast majority of the country. But the electoral timetable makes it questionable how long the tax would apply for, if at all.
The aim of the tax is to subsidize extending broadband to homes where phone and broadband companies do not consider it profitable to fund line upgrades. Although more than 50 countries around the world have some form of government scheme to expand broadband beyond that which would be provided by the free market, this appears to be the first case of a specific tax to fund expansion.
Britain had already committed to getting speeds of 2Mbps available in “virtually all” homes by 2012. In confirming the tax today, Chancellor (finance minister) Alistair Darling (pictured) said the money would also help ensure 90% of homes had “super-fast” broadband by 2017.
The tax of £6 (approx US$10 per year) would actually be charged to the telephone line provider, so it remains to be seen how much if any of this would be passed on to the customer.
It’s a strange way of collecting the tax as telephone use is so common that nearly everyone will be paying it and the money might as well be collected as part of general taxation. There isn’t even that much of a logical link between telephone line rental and broadband provision: people without a computer will still have to pay the tax, while the fact that the tax is apparently on copper phonelines means people who get both phone and broadband services through fiber-optic cable (and thus get some of the best speeds currently available) will escape the tax.
The proposal is as close to guaranteed as possible to become law. That’s because it is part of an overall finance (or budgetary) bill, which it is almost unheard of for government parliament members to fail to get the backing of Parliament.
However, there is an election due by next June at the latest, at which polls suggest there is a strong possibility of a change of government. The main opposition party has already said it would scrap the broadband tax if it took power.
The proposal for the tax came in a report titled Digital Britain. That same report also proposed a tax break for British video game developers, an idea rejected by Darling today. That’s led to criticism that without the tax break, British firms may lose key staff to high-paying rivals in other countries.