IT industry leaders have slammed the Government's refusal to accept
proposed tax incentives to pump life into the UK's flagging
broadband infrastructure.
The Government accepted 14 out of 15 measures proposed by the
Broadband Stakeholders Group (BSG) when it published its UK Online
strategy document this week, but drew fire for failing to announce
new tax incentives which had been called for by the group.
David Harrington, director general of the Communications Management
Association, said, "It is a great opportunity missed - there is
nothing to give confidence there. We were half prepared for such a
response when the pre-budget statement failed to mention tax breaks
for broadband.
"There should be tax credits for suppliers and tax relief for users
to make the outlay on broadband tax-deductible. If the Treasury is
worried about a return on its 'investment' it needs to look to the
South Korean example, where comprehensive government encouragement
saw a return in 16 months."
Rejecting the BSG's call for tax incentives, e-commerce minister
Douglas Alexander pointed towards existing tax breaks, such as the
ability of small businesses to claim 100% first year allowances on
broadband investment.
The DTI unveiled a package of measures including: clarifying
existing tax measures to encourage teleworking; an undertaking to
engage with the private sector in a marketing campaign; encouraging
the use of broadband in public services; and infrastructure sharing
schemes to hasten broadband roll-out in rural areas, including a
promised pilot scheme in East Anglia.
Tom Wills-Sandford, a BSG member who is IT director at the
Federation of the Electronics Industry (FEI), said, "The FEI is
disappointed that the Government did not recognise the importance
of fiscal measures which would have given a boost to the adoption
of broadband."
In a report earlier this year, the BSG revealed that the UK is
currently 10th out of the 11 leading economies in broadband
adoption and that even if its recommendations to improve this
position are followed it would still only reach seventh place by
2005.
In February the Government set a target for the UK to have "the
most extensive and competitive broadband market in the G7 by 2005".