Labour ditches 50p broadband tax in wash-up

Government plans to fund high-speed broadband networks were in disarray after ministers admitted there was not enough time to debate the proposed 50p per month tax on fixed-wire phones.

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The tax, which Conservatives say they would scrap if elected, was proposed as a way to subsidise the roll-out of broadband network speeds above the government's proposed 2mbps universal obligation on the main network operators.

Leader of the House Harriet Harman told parliament there was too little time to put through the finance bill that contained the tax proposal before parliament is dissolved for the General Election on 6 May.

The tax was to have raised £1bn by 2017. The money would have been used to help network operators put in "superfast" broadband networks, especially in areas in which it would be uneconomic under normal commercial conditions.

The Select Committee on Business and Innovation said the tax was unfair in that it taxed people with traditional phones at the expense of those with mobiles, and people who were less likely to benefit from the improved access.

It was also unclear whether Virgin Media's landline customers would have had to pay the tax. It also left unanswered the tax liability for phones connected to PBXs and those who used voice over Internet Protocol (VoIP) to make phone calls.