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MPs brand 50p landline tax unfair

Wednesday 24 February, 2010

By Becca Talbot - becca@consumerchoices.co.uk

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Ministers have said the government’s proposed monthly tax on fixed home phone line would be regressive and poorly targeted.

Under the proposed landline duty, every household in the country with a fixed phone line will be charged 50p a month, in an attempt to raise £175million a year to fund the rollout of superfast broadband across the UK.

A new report by the Business, Innovation and Skills (BIS) Committee has slammed the tax however, branding it “unfair” and arguing that the government should allow market forces to decide who gets faster broadband.

The Committee said: “[The tax] will place a disproportionate cost on a majority who will not, or are unable to, reap the benefits of that charge.”

Some of the UK’s home phone and broadband suppliers have backed-up the Committee’s findings, arguing that a phone line tax would be unfair for their customers.

Andrew Heaney, director of strategy and regulation at TalkTalk (www.talktalk.co.uk) said: “I welcome the conclusions of the select committee. Its findings chime with what we have been saying since the tax was first mooted last summer - it is an unfair and regressive way of funding superfast broadband which would deliver less benefit than it will cost and in fact slow roll-out.”

Other experts have argued that the funding should come from the industry, rather than the customers. “If you look at the age profile of people with landlines, you will find it is older people. The majority of younger people, I think 75%, use mobiles and do not have a landline,” said Jonathan Stearn, of Consumer Focus.

The tax was proposed in the Lord Carter’s Digital Britain report in June last year, as a way of funding the rollout of fibre-based, next-generation broadband to parts of the UK - such as rural areas - where broadband providers are refusing to invest due to perceived poor returns.

The Digital Britain report said the proposed 50p duty was “modest, fair and affordable” and the best way to push forward with superfast broadband.

Consumer group the Communications Consumer Panel recently highlighted that homeowners with a landline that is on a low-income social phone tariff, such as BT Basic, would be exempt from the tax. Only 850,000 of a possible four million eligible homes are on these tariffs however.

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