Why you could pay more broadband tax than BT

A Government consultation paper on the so-called Broadband Tax admits that consumers and small businesses are likely to pay more than huge corporations.

The 50p per month charge will be applied to each landline that runs into a residential or business property, meaning that homes and offices with multiple lines will be taxed at least twice.

However, the Treasury’s consultation paper on the Landline Duty (PDF) admits that big businesses will likely be hit with minimal charges because of the way the tax is structured. “Large firms usually have bespoke telecommunication solutions,” the paper states. “For example, large offices or call centres may only have a single high capacity fibre connection and therefore could pay as little as 50 pence per month.”

Small or medium-sized businesses that have more than one line running into their offices will be forced to pay the £6-per-year duty on each line. That creates the ridiculous situation of, say, a small estate agent’s office with three telephone lines paying more than BT’s London headquarters.

The Government’s consultation paper claims that “it is unlikely that any office would have a substantial number of lines as it becomes more cost effective to have a bespoke solution.”

Nevertheless, it admits “there is an imperfect relationship between the amount of duty paid and the size of the business in terms of number of employees. We expect that in general larger firms will have a higher exposure to the new duty than smaller ones.”

Dead lines taxed

There’s further bad news for businesses that have been forced to downsize during the recession – lines that are no longer active will still qualify for the 50p charge.

“The duty will be payable on all local loops that are made available for use by an owner whether or not the lines are actually used,” the consultation states. “It will also be payable on all local loops regardless of whether the loop consists of a copper pair, a co-axial cable or a fibre connection.”

However, customers of Virgin Media – who receive their broadband over coaxial cable and their telephone over a separate copper line – will only be asked to pay once.