New telephone tax to fund broadband

23 September 2009

Households will be taxed for having a fixed-line telephone as early as next year, to help fund high-speed broadband networks.

The tax, which was first proposed in the Digital Britain report in June, will cost households with a fixed-line telephone an additional £6 per year. Speaking at a computer debate earlier this week, the minister for Digital Britain Stephen Timms warned the new tax could come into play before the next general election.

Timms said profits from the new tax, expected to be around £175 million a year, are needed to fund high-speed broadband networks.

He added: “It is vital for jobs and growth that Britain has a world-class digital infrastructure. I am wholeheartedly committed to plans set out in the Digital Britain White Paper for a levy to ensure that over 90% of the country has access to next generation broadband by 2017.”

The government plans to legislate the tax in a Finance Bill during the forthcoming Parliamentary session. However, the Conservative party told the BBC that it would oppose such a tax.

Communication experts, meanwhile, are concerned about the impact such a tax will have on consumers.

Steve Weller, marketing director at, slams the tax as “robbing Peter to pay Paul”. 

“Vulnerable groups in the country, such as the elderly, rely heavily on their home phone but have absolutely no use for broadband,” he explains. “It’s outrageous that they will be forced to fund the creation of a Digital Britain that they will play no part in.”

Many households have already seen the price of their line rental increase, and research from recently revealed that half of consumers feel these costs are not good value for money.

Michael Phillips, product director at the comparison website, says: “This is just another body blow to customers that have already seen the majority of telecoms suppliers significantly raise line rental charges this year.”

He advises households stung by line rental hikes to move onto paperless bills - known as e-billing. Paying by direct debit, meanwhile, could save you as much as £5 per month compared to paying by cheque.

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