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Government announces broadband tax

Every household to pay 50p to fund superfast web

A new 50p broadband tax is to be levied on every home to pay for faster net access under plans announced by chancellor Alistair Darling today in his pre-budget report.

The government said that the 50p per month tax, which could be added to telephone bills from next year, will be used to fund super-fast broadband access to the internet in all parts of the country.

But Which? Computing has learnt that consumers with more than one line could pay for each line they have. 

This means that the nine out of 10 internet users who have a separate broadband connection to their telephone line could pay double, putting an extra £12 on bills a year.

Super-fast broadband access

It is still unclear as whether VAT would be added to the tax, which will push the figure to £1.17 a month. These details are likely to be debated in a consultation paper to follow.

Telecoms companies that Which? Computing has spoken to have voiced concern that the tax will not have to be separated on the bill meaning that consumers will see the extra 50p as a price hike rather than a tax.

Which? undertakes a twice-yearly review of more than 100 home broadband deals from BT, Sky, TalkTalk, Virgin Media and many more.

Access for remote communities

Announcing the tax, Mr Darling said: ‘We are modernising the UK’s digital infrastructure and, in the process, creating thousands more skilled jobs.

‘We have provided funding to help extend the opportunities of the broadband network to more remote communities. We now want to go further, so we can provide the next generation of super-fast broadband to 90 per cent of the population by the end of 2017.’

BT is  rolling out next-generation broadband to around 40% of the UK while Virgin Media offering speeds of up to 50Mbps (megabits per second) to around half of UK homes.

In the meantime, read the Which? guide to boosting your broadband speed.

The Digital Britain White Paper committed to introduce the new duty in the financial year 2010-11.

Meanwhile a separate report out today says the cost of telephone and internet services is falling, according to the communications regulator.

The average household spend on fixed-line, mobile, internet and broadband services fell last year, with fixed-line down from £23.49 to £22.26, mobile down from £33.98 to £32.04, and internet and broadband down from £11.37 to £10.71, Ofcom‘s The Consumer Experience Report found.

The report put the fall in mobile charges down to the increasing popularity of low-cost SIM-only contracts, especially among younger consumers, while falling broadband prices were driven by bundled services.

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