Broadband Tax Approved In Pre-Budget Report

The government’s controversial proposal for a 50p-per-month broadband tax has been approved by chancellor Alistair Darling in his pre-Budget report. Under the scheme, anyone with a fixed line phone will be obliged to pay the tax, which will be used to provide super-fast broadband to 90 percent of UK households by the end of 2017.

“We are modernising the UK’s digital infrastructure and, in the process, creating thousands more skilled jobs,” said Darling in his speech. “We have provided funding to help extend the opportunities of the broadband network to more remote communities. We now want to go further.” Darling stated that the levy would be included in the Finance Bill.

The broadband tax, which is expected to raise around £175 million a year, has attracted much criticism from industry experts, some of whom say the fund will fall a long way short of the amount needed to provide super-fast fibre services to every UK home. BT has already warned that the government’s Digital Britain plans may need rethinking, estimating that the cost of the roll-out will be closer to £5 billion.

“Most experts believe that the amount to be raised by the broadband tax falls well short of the cost of providing high-speed broadband to rural homes,” Charlie Ponsonby, CEO of broadband comparison site Simplifydigital.co.uk told the Telegraph. “The tax will either have to be raised, or the Government will have to revise the target of 90 per cent of UK homes having access to super-fast broadband by 2017.”

Campaigners and ISPs such as TalkTalk have also warned that the tax will end up being higher than predicted. “General taxation would be fair and proportionate, but this tax is regressive and hits the poorest people hardest,” said Andrew Heany, director of strategy and regulation at TalkTalk. He went on to claim that, despite the government’s aim for digital inclusion, the broadband tax would mean 100,000 fewer people on the Internet.

The government claims that money raised by the tax will be used primarily to increase coverage in rural areas, and benefit the 30 percent of homes that experts think will be overlooked by commercial fast broadband plans.

The Conservative Party has already said it will scrap the tax “as soon as possible” if it wins power at the next election, warning that “heavy-handed state intervention” will deter private companies from investing money to upgrade the country’s Internet infrastructure. Tory shadow culture secretary Jeremy Hunt claims the Conservatives would favour a market-led approach, according to the BBC, with public funds only considered once the commercial market has taken broadband as far as it can.

The government laid out its strategy to tackle illegal file-sharing in the Queen’s speech in November, but no mention was made of the controversial broadband tax at the time.