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50p tax could add up to £21.15 per year according to leaked documents
26 Nov 2009 | 23.24 Europe/London
Leaked Government documents appear to reveal that the 50p levy on fixed lines intended to fund Britain's access to super-fast broadband could cost consumers more than previously thought. Accordingly, not only will Value Added Tax (VAT) come in the equation, but we also now appear to have confirmation that households with more than one phone line will be charged separately for each one.
Whereas the Inland Revenue once in a while likes to run advertising campaigns with the slogan "tax doesn't need to be taxing," in this instance the Government's proposed tax on fixed lines appears to be a very literal exception. On top of the 50p-a-month we'll be expected to stump up if and when its anticipated Finance Bill is eventually enacted, any move to bolt VAT onto that figure would not only be bad news for headline writers - the "58.75p tax" certainly isn't going to catch on - but effectively amount to a tax upon a tax. And this is apparently according to a Revenue and Customs document, no less. Put that in your HMRC and smoke it.
But there's even worse news for the 1.7 million of us who supposedly rent more than one phone line: it looks like we're set to be charged for each individual line we have. In the case of households with three phone lines, that would now add up to £21.15-a-year. Perhaps this goes some of the way to explaining why Ministers think the broadband tax will raise £175 million-a-year in order to fund next-generation broadband in rural areas. (The inclusion of VAT, incidentally, should add another £30 million-a-year to Government coffers). It's also emerged that fibre-optic lines - and not just copper ones - will fall under the remit of the levy, so even people who already have Next Generation Access (NGA) aren't off the hook.
All of this comes from documents originally leaked to the Conservative Party and shown to The Times. Internet service provider TalkTalk were of course on hand to give a quote to the broadsheet: “The original 50p a month tax is regressive and unfair," a spokesman for the firm said. "On top of all this now the Treasury will steal yet more off homes in VAT [in a move that would] add insult to injury for consumers," he continued. With the ISP previously having predicted a tax levied at a comparatively mere £6 a year would mean a hundred thousand homes could no longer afford broadband, who knows how many people stand to lose out now?
The other usual suspects came out in force against the Government, which appears to be broadening the scope of the "small general supplement on all fixed copper lines" it proposed in the Digital Britain white paper back in June. "This tax hasn't even been implemented yet they are already looking to triple it," said shadow culture secretary Jeremy Hunt. "How can they possibly square a commitment to universal broadband access if they are massively hiking the prices consumers will have to pay for it?" Meanwhile, a mouthpiece for the Murdoch Empire (owner of The Sun, which is explicitly waging a campaign against the Labour Government) emerged in the form of a Sky spokesperson. “This is a question of basic fairness," he said. "A telephone licence fee will penalise the less well-off so that faster, premium-priced broadband services are available to an unknown number of people in rural areas who both want and can afford them. This is not a good basis for a universal tax."
There's also one part of the leaked papers that's especially irksome for the telecoms industry. It states as follows: 'There will be no requirement on owners or retailers to show the duty separately on their billing to end users. This is to prevent costly systems changes for line owners that might arise from having to account for the tax on individual invoices." What this means in practice is that the broadband levy, VAT included, will be a hidden charge on the bill phone companies send their customers - and the fear is that consumers will blame them for the charge, not the Government.
The .gov also had a spokesman up its sleeve, though they were neither able to confirm or refute the Tories claims.
If the leak is accurate, the Government will have to comment on same issues once its Finance Bill is published - or, in other words, we'll have no official confirmation until early 2010.
Whereas the Inland Revenue once in a while likes to run advertising campaigns with the slogan "tax doesn't need to be taxing," in this instance the Government's proposed tax on fixed lines appears to be a very literal exception. On top of the 50p-a-month we'll be expected to stump up if and when its anticipated Finance Bill is eventually enacted, any move to bolt VAT onto that figure would not only be bad news for headline writers - the "58.75p tax" certainly isn't going to catch on - but effectively amount to a tax upon a tax. And this is apparently according to a Revenue and Customs document, no less. Put that in your HMRC and smoke it.
But there's even worse news for the 1.7 million of us who supposedly rent more than one phone line: it looks like we're set to be charged for each individual line we have. In the case of households with three phone lines, that would now add up to £21.15-a-year. Perhaps this goes some of the way to explaining why Ministers think the broadband tax will raise £175 million-a-year in order to fund next-generation broadband in rural areas. (The inclusion of VAT, incidentally, should add another £30 million-a-year to Government coffers). It's also emerged that fibre-optic lines - and not just copper ones - will fall under the remit of the levy, so even people who already have Next Generation Access (NGA) aren't off the hook.
All of this comes from documents originally leaked to the Conservative Party and shown to The Times. Internet service provider TalkTalk were of course on hand to give a quote to the broadsheet: “The original 50p a month tax is regressive and unfair," a spokesman for the firm said. "On top of all this now the Treasury will steal yet more off homes in VAT [in a move that would] add insult to injury for consumers," he continued. With the ISP previously having predicted a tax levied at a comparatively mere £6 a year would mean a hundred thousand homes could no longer afford broadband, who knows how many people stand to lose out now?
The other usual suspects came out in force against the Government, which appears to be broadening the scope of the "small general supplement on all fixed copper lines" it proposed in the Digital Britain white paper back in June. "This tax hasn't even been implemented yet they are already looking to triple it," said shadow culture secretary Jeremy Hunt. "How can they possibly square a commitment to universal broadband access if they are massively hiking the prices consumers will have to pay for it?" Meanwhile, a mouthpiece for the Murdoch Empire (owner of The Sun, which is explicitly waging a campaign against the Labour Government) emerged in the form of a Sky spokesperson. “This is a question of basic fairness," he said. "A telephone licence fee will penalise the less well-off so that faster, premium-priced broadband services are available to an unknown number of people in rural areas who both want and can afford them. This is not a good basis for a universal tax."
There's also one part of the leaked papers that's especially irksome for the telecoms industry. It states as follows: 'There will be no requirement on owners or retailers to show the duty separately on their billing to end users. This is to prevent costly systems changes for line owners that might arise from having to account for the tax on individual invoices." What this means in practice is that the broadband levy, VAT included, will be a hidden charge on the bill phone companies send their customers - and the fear is that consumers will blame them for the charge, not the Government.
The .gov also had a spokesman up its sleeve, though they were neither able to confirm or refute the Tories claims.
We do not comment on the contents of leaked documents. It is vital for jobs and growth that Britain has a world-class digital infrastructure. Next-generation broadband brings a range of innovative services and applications with wide business, health and social benefits. We want everyone to experience the opportunities that next-generation broadband offers, which is why we plan to introduce a 50p levy on all fixed lines to help the market to access homes and businesses in hard-to-reach areas.
If the leak is accurate, the Government will have to comment on same issues once its Finance Bill is published - or, in other words, we'll have no official confirmation until early 2010.
Broadband is a utility. It has to be delivered ubiquitously. Water is collected in the rural areas. It costs more to get it to urban areas. should we just supply the rurals with water? Apart from anything else the tax is a smokescreen to get the press wittering and divert them from the real issues. As is the prirate campaign. The real scandal is that government is saying we are getting next gen and all we are getting is patched up copper. We need fibre to the home to compete in the worlds digitial market place.
Another point I haven't seen made anywhere is if BT are allowed to implement the BET solution is that householders will have to pay for two lines, and two levies for each broadband connection of 'up to 2meg' that they have. Could mean that SMEs in rural areas are faced with massive bills for an inadequate service.
None of it makes sense.
27 Nov 2009 | 09.02 Europe/London
@Chrisdoyle, so what are you suggesting Chris? That they abolish the 50p tax and just leave rural areas with no broadband.
Also your statement about water being more expensive to deliver to cities is totally wrong. The water might originate from rural areas, but it only takes one pipe to get it to the center of a city. From there, it's FAR FAR cheaper to distribute to load of densley packed houses in the middle than to run all the pipework to all the villages that surround it (on a per properly basis). This is true of every utility. Your statement would only be true if there was a spring of water which needed NO treatment (and therefore no treatment plant) in every single rural village in the country! No idea where you got your figures from - it sounds like you just made it up without thinking it through or knowing anything at all about water processing and distribution?
27 Nov 2009 | 12.58 Europe/London
just thought, what about Sky? doesn't its broadband come from Luxembourg so has no or a reduced rate of Vat? Top of the head thought, but would Sky customers potentially pay less, if you throw vat in..
27 Nov 2009 | 17.25 Europe/London