BT will take legal action if it is included in the Chancellor?s windfall tax proposals, to be announced in the forthcoming Budget, warned the telco's chairman.
Iain Vallance said: ?If we were stung in a big way and if it could be challenged, we owe it to our shareholders to challenge it.?
BT was one of the UK's first utilities to be privatised, in a market that has been opened up to allow hundreds of rival operators to compete. Since it was privatised in November 1984 its revenues and profits have more than doubled, to a level that some observers believe is excessive. The government has said the windfall tax will fall on privatised utilities with profits deemed to be excessive.
In 1985 - the first full year after privatisation - BT's pre-tax profits were #1.5 billion, compared to #990 million in 1984, with turnover up from #6.9 billion to #7.7 billion. Yesterday it announced fourth quarter pre-tax profits of #3.2 billion.
A BT spokesperson said: ?On all accounts we don?t think we would be liable, but if we were brought into the net we would mount a legal challenge.? He said BT does not consider itself a utility, or a monopoly.
?Telecommunications is more sophisticated [than a utility}. We don?t push a single product through a single pipe. The growth of the value added services we provide distorts the concept of an old fashioned utility,? he added.
A spokesperson at HM Treasury said the government has made its position clear on the windfall tax and that utilities would be taxed on excessive profits made from privatisation.
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