The UK government yesterday revealed more details of a planned landline tax, which would be used to finance the roll-out of super-fast broadband throughout the country.
In his annual budget, chancellor Alistair Darling said the £0.50 tax would be levied on all UK landlines from October 1, to raise £175 million a year to fund deployment of 50Mbps broadband access to 90% of UK households by 2017.
The plan is part of the government’s Digital Economy bill, which aims to position the country as a leader in web technologies.
Darling’s details follow a speech by prime minister Gordon Brown on Monday, which outlined the landline tax as one source of funding for super-fast broadband rollout.
However, the budget contained little additional information on the government’s broadband funding plans, despite Brown stating that it would, FT.com reports.
The news service states the levy has already been heavily criticised by other Labour MPs, while rival party the Conservatives say they will scrap the tax and use funds from national broadcaster the BBC to finance 100Mbps rollout to half the country by 2017.
Business leaders say the move will result in greater charges for UK fixed-line and broadband service providers.
Amanda Tickel, telecoms tax partner for Freshbusinessthinking.com, says providers that don’t pass the higher fees onto consumers risk eroding their margins, “particularly in the case of the highly competitive broadband market.”