£6 broadband tax could be trebled for multiple line homes plus VAT

Thursday, 26 November 2009 12:24

Up to two million people will have to pay a new £6 tax on their telephone line according to leaked government papers.

The Times newspaper has reported that minister plan to tax 1.7 million households with more than one line for each line they rent before adding VAT on top.

The planned tax has been drawn up by the HM Revenue & Customs in order to pay for the introduction of superfast broadband.

Families with one telephone connection, and separate lines for broadband internet and a fax would end up paying £21.15 a year, instead of the originally announced £6, reports The Times.

When the Finance Bill was first announced in June it was assumed each household would be charged an annual flat rate of £6.

The bill, which is due to be published in early 2010, has been leaked to the Conservatives, who have promised to scrap the plan if they win the general election.

Under the proposals customers will pay 50p a month tax for each phone line they have, which ministers hope will raise up to £175 million a year to pay for superfast broadband in rural areas.

The leaked document also shows that the Treasury is set to bring in an extra £30 million by choosing to charge VAT on top of the new tax.

Telecoms companies are concerned they will be blamed for pushing up prices as they have been urged not to show the tax as a separate item on bills. They have also warned the additional tax could drive 100,000 households from the internet altogether.

The leaked document states: "There will be no requirement on owners or retailers to show the duty separately on their billing to end users.

"This is to prevent costly systems changes for line owners that might arise from having to account for the tax on individual invoices."

Jeremy Hunt, the shadow culture secretary, said: "This government is simply unable to level with the public. This tax hasn't even been implemented, yet they are already looking to triple it.

"How can they possibly square a commitment to universal broadband access if they are massively hiking the prices consumers will have to pay for it?"

A government spokesman said: "We want everyone to experience the opportunities that next-generation broadband offers, which is why we plan to introduce a 50p levy on all fixed lines to help the market to access homes and businesses in hard-to-reach areas."

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