Government consults on new landline tax to pay for roll-out of super-fast broadband

The Government is consulting on draft legislation to implement its proposed landline tax, which it recently announced in the Pre-Budget Report. The aim is to charge £6 a year annually in arrears to the local loop owner, which will pass on the charge to retailers and in turn end up with users. It is to apply to telecoms and broadband lines, but the tax should only apply once if more than one service is obtained over the same loop (even if from different providers). The aim of the tax is to raise enough money to roll out super-fast broadband to 90% of the UK by 2017. Super-fast broadband would improve users’ broadband experiences through higher bandwidths, a better balance between downloading and uploading speeds, and more reliable higher quality services, with speeds of 50 to 100 megabits per second or even more – enabling large content such as iPlayer programmes to be downloaded very quickly.

The Government is hoping to raise about £175m a year from this tax, which is due to start for the year commencing April 2010. Whether the tax will actually happen, though, depends on the outcome of this year’s General Election. The Conservatives would like to scrap the tax if they win. They would prefer to see business get as far as it can, and only consider tax and public spending once market providers such as BT and Virgin Media have finished their commercial roll-outs.

The consultation is open for anyone to comment until 12 February 2010 and can be found here: http://www.hm-treasury.gov.uk/d/consult_landlineduty.pdf.