Tuesday, February 23, 2010

The 50p broadband TAX

Peter Luff has just been defending the market as being able to provide super fast broadband for all (although maybe with a little help from the BBC licence fee digital switchover budget) and criticising the 50p broadband tax.

Much has been made that the 50p tax is regressive and unfair as it targets the rich and poor alike. This is true, but also equally true of the BBC licence fee, which if it was called the BBC tax would also be regressive taxation.

What the government have yet to say though is how that 50p will be spent. Will it all go to BT to provide the broadband infrastructure across the country, will private companies get to bid for government money to provide broadband to identified rurual areas or will it all jut go into the tax take.

According to the CIA Factbook (It’s not as sinister a publication as it sounds) in 2008 the UK had 33.209 million lines (interestingly we apparently have 75.56 million mobile lines) so the 50p per month tax will net £199.25 million pounds a year. The so called Next Generation Fund proposes to help fund the rollout of next generation broadband services to 90% of the country by 2017, by which time it will have raised roughly £1.4 billion pounds.

Surely if we really want to point this idea out for what it is, a tax on everyone, and nothing to do with broadband, then we need to be challenging the government to confirm that this money will be ringfenced for this purpose alone.

Unless they do this then what stops it just becoming another income stream on the exchequer spreadsheet. In my usual financial measure, 199.25 million pounds is 4,151 extra police officers a year, which might look rather more attractive to win votes than broadband for the non Labour voting countryside. We already now that other flat taxes such as fuel duty and road tax don’t actually get spent on what they’re supposed to so why should this be any different?

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