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Coalition Government Drops UK Broadband Tax

Gordon Kelly


Coalition Government Drops UK Broadband Tax

It may not be as important as the Digital Economy Act, but the first major impact of the Coalition government has been felt this week in the tech space after it decided to drop the UK broadband tax. Labour had pushed for a 50p per month tax to be collected from all UK citizens in order to help with the roll-out of high speed broadband in rural areas following the Digital Britain Report.

"I am happy to be able to abolish this new duty before it is even introduced," said culture secretary Jeremy Hunt. "Instead, we will support private broadband investment, including to rural areas, in part with funding from the Digital Switchover under-spend within the TV Licence Fee." Hunt added that despite dropping the tax his aim was to see Britain have the "best superfast broadband network in Europe".

Putting some meat on these bones, Hunt said one possible (and potentially sensible) route was making water, gas and electricity companies open up their ducts so fibre could be laid inside them. This would eliminate the need for the costly and slow process of digging up streets and roads. I'd suggest he should also look at H20's sewer broadband initiative.

That said, it isn't all good news since the budget has dictated an increase in VAT to 20 per cent from 4 January 2011 which will see broadband prices rise in any case. For example, a £10 bill would rise by 21p and if you're on Virgin's blazingly fast £28.99pm 50Mbit cable broadband service you'll actually be paying more than the broadband tax would have required in the first place.

So was Hunt right to drop it? In all honesty, I really don't care. The Digital Economy Act is the real plague on our society and the sooner this appalling piece of legislation is repealed the better.

Source: BBC News


June 23, 2010, 4:46 am

Wasn't the "Broadband Tax" originally the "Piracy Tax" anyway? I seem to recall they wanted to charge the same amount to account for the "probable" file-sharing which would occur on any given broadband line. Then a short while later they scrapped that and came up with this Broadband Tax with the excuse of paying for a network upgrade or something.

Could be hazy, it is, blimey is that the time? Must go...


June 23, 2010, 6:21 am

Sorry to be pedantic but if the bill is £10 incl VAT at the moment then after the VAT rise it will increase by 21p to £10.21

(10.00/1.175)*1.20 = 10.212766 As £10 is 117.5% already not 100%


June 23, 2010, 7:35 am

@Oli - fair point. I was working on approximates, but we'll got with exact figures instead. Many thanks.


June 23, 2010, 11:59 am

Does anyone really expect the private sector to fund this. The beaty of it was was that everyone would get a superfast broadband connection by 2020 with 2MB for everyone by 2012. With everyone connected online voting and other public services could be put online (obviously those who don't have a computer would miss out) thus saving money in the long term. This is a short term government that is not investing in the future!

This has nothing to do with deficit reduction and to further my point as does a 3 year 3.5% loan to Sheffield Forgemasters - its a friggin loan that you would get back and would generate a good return in tax anyway, instead there letting the business go to South Korea to build our new nuclear reactors! Its about Tory ideology. Shame on you Mr Sellout Clegg!


June 23, 2010, 1:57 pm

"Hunt added that despite dropping the tax his aim was to see Britain have the "best superfast broadband network in Europe". "

I lol'd


June 23, 2010, 2:18 pm

Another, semi-related bit of news is that they have dropped the tax cuts/incentives for the videogame industry which is a shame as it seems to have worked well for the film industry.


June 23, 2010, 7:51 pm

@Joe: There wan't a doubt in my mind they'd drop it. I attended a Q&A with the three ministers (who routinely liaised with the game industry) from each of the major parties before the election.

Ed Vaizey's knowledge of gaming seemed to extend to the online game he'd played with his kids on the BBC website the night before.

Ok, that may be a bit harsh and he has attended other events etc., but he still came across as someone who'd just done his homework well but wouldn't have any interest if the task wasn't assigned to them.


June 24, 2010, 3:51 am

drdark: Sad but true. If the expenses scandal showed us how removed the political class are from "the real world", then this and the Digital Economy Bill are further examples of how little understanding they have of "the modern world". If it doesn't directly benefit them (I'm sure many love their Blackberrys) then they're not remotely interested.

Sadly the same goes for others who are capable of influencing policy, for example in the press. At least one pundit in a Tory-leaning broadsheet was perplexed by the bizarre idea that the videogame industry should receive special incentives. Why on Earth would we do that? I don't know - perhaps because we need to encourage the "creative industries" since most of our other industries have gone to the wall, and because it's a vast market in which British companies could actually excel and bring in some serious money if we give them a chance... but hey, I'm not a member or supporter of the Party that supposedly best understands the economy, so what do I know?

As for relying on the private sector to provide investment in new infrastructure for improved broadband service and coverage: Ah yes. Market forces will save the day. No doubt the providers have simply been waiting for a Conservative government to allow them to shine. I'm sure they won't simply continue providing the poorest service they can get away with. Improvements will be guaranteed by competition (because after all there's no such thing as a cartel). Oh I'm sorry, my Sarcasm Lock key appears to be broken...

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