Total Pageviews

Friday, December 11, 2009

Decades of extra tax on UK fixed phone lines?

The 50p Digital Divide tax on business and residential fixed phone lines was always going to be a disaster in terms of equity (mobile users don't pay, the poor don't pay, all benefits go to rural users) but just how long it will last has become a little clearer:

Mr Timms: We have not put a date on the withdrawal of the levy; what we have said is that we think we need £1 billion between now and 2017 to hit the 90% target. One could take the view that at that point it should be withdrawn or one could take the view actually that we would want to keep the levy in place in order to generate funds for the final 10% and that is a judgment to be made a bit later in the process.
Q225 Mr Oaten: But your figures, presumably, know from how many individuals will be paying the levy at which point you reach certain revenue-raising targets?
Mr Timms: Yes. We are assuming that everybody with a phone line at the moment, other than those on social tariffs, will be paying.
Q226 Mr Oaten: What I am getting at is in three years' time how much money will you have raised?
Mr Timms: I think it will raise between £150 million and £175 million per year.
Q227 Mr Oaten: But the intention is that once it has done its job to remove the levy?
Mr Timms: Yes, I think that must be the logic of having a levy for a particular purpose, that once the purpose has been entirely completed ---
Q228 Chairman: Hang on, income tax was used to pay for one particular war, as far as I remember it, and I think we still have income tax!
Mr Timms: We are talking about decisions that are going to be made some years hence but I do not think this levy could be used as a contribution towards general taxation; it needs to be used for the purposes ---
Q229 Chairman: You are such a nice man, Minister! You are so nice!
Mr Timms: The point we can debate, I think, is whether it should carry on beyond 2017 to contribute to the cost of the final 10% next generation broadband.
Q230 Mr Oaten: My point is that if we look at the principle of hypothecation there is a very big difference between putting in place a new tax which is going to fund a service for ever more or a one-off quick hit through a levy. Which is this?
Mr Timms: It is more like the latter than the former because once the investment has been completed the purpose of the levy no longer exists.

No comments: