Minister Casts Doubt On UK Broadband Tax

by Robert Lee, Tax-News.com, London

18 August 2009

The UK’s new e-commerce minister Stephen Timms has cast fresh doubt on whether the present government will have sufficient time to enact a proposed broadband tax ahead of the next general election.

The government is planning to formally announce the new tax in next budget, expected in March next year, but with a general election due to be held no later than June 2010 – and with the incumbent Labour government widely predicted to be ousted by the Conservatives – there may not be sufficient time to get everything in the subsequent finance bill onto the statute book.

The proposed GBP6 per year tax on landline bills was a key element of the Digital Britain report by Timms’s predecessor, Lord Carter, to help pay for the expansion of a super-fast broadband network across the UK. The tax is expected to raise GBP150m per year, but would have to be in place for 20 years to meet the full cost of upgrading the country’s broadband services. The Conservatives, however, oppose the tax, and a future Tory government is unlikely to implement the measure.

But Timms told the Sunday Times that he can’t say for sure, whether the tax will be legislated this side of the general election.

The minister explained that with an election due so soon after the budget, the finance bill will probably be split into two parts, allowing the government to force through the less contentious parts prior to the country going to the polls, with the more controversial elements left until after the election.

However, the government is expected to take up other proposals contained in the Digital Britain report much sooner, such as giving the telecommunications regulator new powers to tackle illegal file sharing and other forms of internet piracy.

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