MPs brand broadband tax 'regressive'

The proposed 50p landline levy has met with stiff opposition

A group of cross-party MPs has called on the government to rethink its proposed landline levy of 50p to fund next-generation access networks, referring to it as "ill-directed" and "regressive".

The Business, Innovation and Skills Committee argued that the levy is not the right way to raise the revenue required to rollout the high-speed networks.

"We reject the proposal for a 50p levy, and recommend that next-generation access, to the extent that publicly funded support is necessary, be supported out of general taxation," it said.

The Committee was also heavily critical of the government's plans to provide all citizens with a minimum 2Mbit/s service, maintaining that such a claim is not based on any reality concerning the speeds consumers will actually receive.

Treasury minister Stephen Timms was quick to dismiss the concerns when questioned by the Committee, saying that he "does not think there is any ambiguity about what 2Mbit/s means".

Timms added that the speed would prove adequate, given the government's aim with the Universal Service Commitment.

"The commitment that we have made will mean that virtually everybody in the UK has a satisfactory broadband service, whereas at the moment 10 or 11 per cent of UK households do not have such a service," he said.

"We think it is the right level of service to give access to the applications which are currently widely used."

However, when pressed, Timms did concede that speeds could not be guaranteed given the nature of broadband services, but remained confident that the service will be acceptable.

"Because of the nature of DSL there is some variability in what is provided, and it can sometimes vary at different times of the day. But I think it is pretty clear what we are expecting everybody to have access to by 2012, and that our funding will enable it," he said.

The government has come under pressure over the landline duty from several quarters. The Treasury itself admitted in a white paper that the tax could hurt small businesses, while a former lord likened it to the poll tax.

The Conservative Party has said that it will ditch the landline duty if elected later this year, and use a portion of the BBC licence fee to fund the rollout.