The new broadband tax has finally been confirmed in the pre-Budget report, meaning that as from next year all homes with a fixed phone line will be liable for a new 50p-a-month (£6-a-year) tax. The tax had long been anticipated as a part of the Digital Britain Report, despite loud opposition from some quarters.
The money raised from the tax will be used to fund the development of faster broadband speeds in rural areas. These areas are more likely to miss out on getting standard access to fast broadband because it is not commercially viable for the broadband companies.
The Chancellor Alistair Darling said that as a result of the tax, super-fast broadband would be available to 90% of the country by the end of 2017. He said that the government is “modernising the UK's digital infrastructure” and that the tax would “help extend the opportunities of the broadband network to more remote communities”. He also claimed that thousands of jobs would be created.
But despite the benefits that have been claimed, criticism is rife in many quarters. Some say that the £170 million it is expected to raise each year will simply not be enough to make any fundamental difference. Indeed, BT has estimated that £5 billion is a more realistic number. The Conservatives have also pledged to scrap the tax so it might not be around for very long anyway.
Which? also revealed that some households which have more than one fixed landline could end up paying a double tax of £12 a year. This would apply to people who have one phone line for their phone connection and one for their broadband connection.
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