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Labour to push for broadband tax before election

Tory row ahead

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The Labour government has reaffirmed its commitment to a 50p per month tax on every landline, and vowed to push through the necessary legislation before the general election in May.

Plans for the levy, to subsidise rollout of fibre-based broadband services in rural regions, were revealed in the final Digital Britain report in June.

But after the announcement there was little sign of Whitehall moving to implement the new tax, and speculation grew that it would be dropped. In August the new Digital Britain minister Stephen Timms added to doubts when he declined to commit to action before the election.

Yesterday however, he confirmed legislation would be brought forward before next May. "[It] will be in the Finance Bill which I'm also responsible for at the Treasury, and my aim is that we should legislate for that this side of the general election," he told a British Computer Society audience.

The revived plans could set up a political clash ahead of the election. Normally the last Finance Bill of a parliament contains only uncontroversial measures, but the Tories have already publicly opposed a broadband tax.

The government estimates the levy will raise between £150m and £175m per year. It wants communications providers to act as tax collectors by adding 50p to every bill and then passing it to a central fund. Most of the industry is expected to resist such a levy.

BT is committed to connecting 40 percent of the country to faster broadband by 2012. It is installing fibre as far as street side cabinets, which will offer theoretical downstream speeds of up to 40Mbit/s.

The £1.5bn investment is targeted at densely populated urban areas, prompting fears of a new digital divide. The tax and subsidy fund are Labour's policy response.

Separately today, BT announced it expects to double the reach of its ongoing ADSL2+ exchange upgrade programme, which offers downstream speeds of up to 24Mbit/s over existing copper infrastructure. It said 75 per cent of premises will be covered by 2011. The programme is years behind schedule. ®

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