MPs Slam Broadband Tax As “Unfair”

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

A cross party group of MPs has slammed the government’s proposed 50 pence broadband tax as ‘unfair’ and called it an ‘ill-directed charge’

MPs from all political parties have lined up to bash the government’s proposed 50p ‘broadband tax’, labelling it ‘unfair’ and saying that most of the people who would pay the tax would not benefit from it.

This was according to a report from the Business, Innovation and Skills (BIS) Committee, which is made up of MPs from all political parties. Indeed, the report is even more damning because the Committee is dominated by MPs from the Labour party, who have six MPs on the Committee, along three from the Conservative Party and two from the Liberal Democrats.

“We believe that a 50p levy placed on fixed telecommunication lines is an ill-directed charge,” said the BIS Committee. “”It will place a disproportionate cost on a majority who will not, or are unable to, reap the benefits of that charge.”

The levy “would have a much greater impact on the less well-off who will pay for an enhanced service which only a minority will enjoy,” it also said in its broadband report, published on Tuesday.

The government announced its broadband plans in its Digital Economy Bill last year. Essentially there are two elements to it. The first is to provide a universal 2Mbps broadband speed minimum to all parts of the UK by 2012, and then roll out super-fast broadband (i.e. fibre) to most of the UK by 2017. All this would be funded through a duty of 50 pence a month (known as the Next Generation Levy) on all landlines in the UK. However the levy is not included in the Digital Economy Bill, but will instead be included in the upcoming Finance Bill.

The broadband tax is only expected to raise around £175 million a year, and has attracted much criticism from the industry, 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.

Meanwhile the MPs on the BIS Committee believe that if the government wants to fund fast broadband, it should be done out of general taxation. The Conservative Party has already said that it would scrap the scheme, and has promised speeds of 100 Mbps for the “majority” of homes by 2017 using money from private investors.

Indeed it seems the BIS Committee agrees with the market-driven approach.

“The government’s proposals to intervene more widely in the next-generation access markets are unwise at this stage,” it wrote. “Early government intervention runs a significant risk of distorting the market and will not allow time for technological solutions to extend the market’s reach across the country. Furthermore, there is little evidence to suggest a pent-up demand for this enhanced service with consumers currently unwilling to pay the premium for such services.”

The Next Generation Levy is currently being considered by the House of Lords.