UK Government Backs Down Over Satellite Tax Plans

by Caroline Maxwell, Tax-News.com, London

16 July 2002

The Guardian reported yesterday that the UK government has backed down on proposals to tax satellite operators for their use of the country's airwaves, replacing the plan with a voluntary scheme.

The newspaper suggested that the climbdown came as the result of pressure from Rupert Murdoch's BSkyB, which is currently only obliged to pay for any signal generated in the United Kingdom and transmitted up to a satellite. Thus, the company's downlink to its 6 million British subscribers is effectively free.

This will disappoint terrestrial broadcasters and mobile phone companies, which earlier this year welcomed the suggestion made by the government's independent adviser, Professor Martin Cave, who argued that inefficient use of the airwaves could hold new terrestrial operators back, and recommended that BSkyB be brought into line with its rivals.

However, despite the fact that the proposals have been substantially watered down, amounting now to a voluntary 'recognised spectrum access' scheme, many in the satellite broadcasting sector were still angered following the release of the consultation document on Monday.

Condemning the fact that companies which do not have recognised spectrum access will not be afforded the same degree of protection from interference as those which have paid the voluntary levy, an unnamed industry source told the Guardian that:

'It's almost like a protection racket, like putting a gun to the head of the industry - if you do not pay this tax we will not protect you.'

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