Broadband tax scrapped

8 April 2010

The broadband tax, collective redress, tax relief on holiday homes and the increased tax on cider have all been scrapped in the last-minute scramble to rush bills through before Parliament is dissolved next week.

The measures were all part of the Financial Services Bill, which was amended on Wednesday in the pre-election “wash-up”. This is the period when ministers historically have to make concessions in order to ensure that bills are approved.

The 50p-a-month broadband tax was a key part of Labour’s strategy to ensure all parts of the country get super-fast broadband. It would have been applied to all households with a landline telephone and would have raised an estimated £170 million a year to help fund broadband roll-out.

The tax wasn’t popular and the Conservative Party vowed to scrap it if it came to power.

The government has also withdrawn the measures in the Financial Services Bill that would make it easier for consumers to seek collective redress against financial services firms. The ability to form class-action lawsuits against financial companies was seen as an opportunity to stamp out bad practises.

The past 10 years have seen consumers hit with mis-selling in areas such as mortgage endowments and payment protection insurance.

Peter Vicary-Smith, chief executive at Which?, says: “Collective redress is a potentially powerful weapon for consumers against the systemic mis-selling of financial products and would prove a real deterrent for firms engaging in unscrupulous sales practices.

“By dropping these measures from the Financial Services Bill, a golden opportunity to empower consumers is being missed. We call on Parliament to reintroduce collective redress at the earliest opportunity.”

The government has also dropped plans for the controversial 10% tax rise on cider announced in the Budget last month. The tax increase had met with fierce opposition and a Facebook group opposing it had thousands on members within hours of the Budget announcement.

Also cut from the Finance Bill was taxation on holiday rental homes. However, Labour says all the tax measures will be re-introduced should it be re-elected.


In reply to by anonymous_stub (not verified)

I would like to point out that BT Broadband is only available on compatible telephone lines. Not everyones's phone lines work with the internet, mine doesn't, it was put down in the 1970's so I don't understand why we are talking about "broadband tax" at all when people are still struggling to access the internet. We don't get broadband through the phone line!

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