UK taxes the Internet
The UK Government has finally found a way to tax the Internet (but missed the target). This new tax has been on the cards for some time now but the Chancellor of the Exchequer, Alistair Darling, confirmed the introduction of the tax in his pre-budget report last week.
The new tax will be levied at a rate of £0.50 (+VAT) per month on all fixed phone lines. The stated purpose of the tax is to help develop future superfast broadband networks. Mr Darling expects the tax to raise about £175 million per year, thus enabling next generation broadband services to reach 90% of the UK population by the end of 2017.
In his speech, Mr Darling said:
“Mr Speaker, we are modernising the UK’s digital infrastructure and, in the process, creating thousands more skilled jobs. We have provided funding to help extend the opportunities of the broadband network to more remote communities.
We now want to go further, so we can provide the next generation of super-fast broadband to 90 per cent of the population by the end of 2017. This will be funded through a duty of 50 pence a month on landlines which will be included in the Finance Bill.”
Concerns have already been raised about the government’s intentions. For example:
- Will the tax be withdrawn in 2017 or will it become like road tax, i.e., not all spent on roads?
- Why is VAT to be levied on top of the tax? (Because, technically, it’s a duty not a tax!)
- Who will the monies raised be distributed to?
- How do you define a fixed telephone line?
- What happens if (when) the tax is not enough?
The Conservatives have vowed to scrap the tax if they win the next election, so it may not be around for too long. However, if they do scrap it, the tax will probably cost more money to implement than it will actually raise.
Oh dear!
