Brits hit with special tax to pay for broadband

Chancellor Alistair DarlingThe 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.


5 Responses to Brits hit with special tax to pay for broadband

  1. £6 isn't much but when you add it to all the other £6s they keep piling on and the fact that it's a blanket tax that affects people who don't use the service, it comes to a point where the government has gone beyond taking the piss. Labour has been as good as dead for almost 2 years but have dragged out the time to call an election to its maximum extent. Oh for a fixed term of office in the UK.

  2. Seems to be a perfectly sensible way of raising money to speed up broadband in the United Kingdom. Individuals who do not use the Internet will not have to pay – simple really.

    As for the comment above about Labour : does this poor misguided fool truly believe that the Tories will do a better job? Watch out – another pig is flying by!! (Probably back to the Parliamentary trough to fiddle some more expenses!)

    Let's get real. Whatever happened to Brits pulling together for the common good? Halcyon days!


  3. On the contrary, JC, it is not a reasonable tax nor taxation method at all.

    It taxes people with phone lines. Correlation does not equal causation. Not everyone with a phone line has a broadband connection.

    Furthermore, this whole idea is a bunch of crap. Cable companies had a big injection of money before from the goverment to improve internet access. Back in the old days of internet expansion, when it was presumed that the growth will increase far more (than it has).

    All other countries with internet access at the time invested in fibre optics, as it was clear that copper would not do the job. What did the British companies do? They hoarded the money and simply amped the line voltage on the age old copper cables, which were only designed for 4K bandwidth.

    Now the 'increasing the voltage' war stopped being short term feasible, and they want taxes to do that what they should have done.

    Its the isp's and phone companies that need to be taxed. Not the consumers.

  4. JC, you make two very incorrect assumptions, one of which Eric has sorted out, the other being that anyone who's had enough of this government must automatically be a Tory. I didn't realise there were only two places on the ballot paper for your cross to go in. Perhaps you're the misguided one.

    And if the government(s) had more balls in the first place, the privatisation and subsequent unbundling of the phone network wouldn't have been a repetition of the usual British establishment's inability to organise a piss-up in a brewery and we, the people, wouldn't need to bail them out of another cock-up with yet more taxes, qv. bank nationalisation.

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