The Edge

Richard Northedge takes on corporate finance

Taxing telephones is unfair and inefficient

Told to look at one poll tax, Lord Carter has devised another one in his Digital Britain white paper. The tax on everyone who has a television will continue but there will now be a tax on everyone with a landline telephone too. And that means just about everybody.

Carter’s £6 a year tax to finance faster broadband access is not large sum but it is a huge principle and involves cross-subsidy when the internet should be self-financing.

The phone tax – and don’t call it a broadband tax; the proceeds will be spent on the web, but the tax is on telephones - will raise £1bn over seven years.

But by taxing all Britain’s 30m landlines it will hit almost every household and every business. It will tax people, especially the old, even if they do not want broadband – or do not want it upgraded to 40Mbs. Yet it exempts those phone-users with fibre-optic rather than copper lines and excludes those – particularly the young – who use mobile phones rather than landlines.

The tax is a cross-subsidy at several levels: from town dwellers to country livers and from private pockets to public companies such as British Telecom.

Poll taxes are bad for many reasons, not least the inefficiency of collecting them. As almost everyone has a television, why require a licence and the machinery for finding and prosecuting those without a licence, when the fee could be added to the general taxes that everyone pays anyway?  Why add £6 to every phone bill rather than collect an extra £6 of income tax?

If nothing else it would be sensible to add one poll tax to the other rather than invent a new one: £6 on the TV licence would be less trouble all round.

But Carter never even addressed the question of why everyone must buy a licence to fund the BBC (and maybe ITV regional news) when they spend most of their time watching other channels.

Taxing phones to finance broadband is as sensible as putting a levy on petrol to fund public libraries. Carter’s brief period in government has given him a peerage for life: he should not be allowed to saddle everyone with a bad tax for seven years.



One comment on “Taxing telephones is unfair and inefficient”

  1. telephones says:

    I agree..Its worthless to burden citizens with telephone taxes….Moreover,the process will be inefficient in providing results….

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