UK Govt rejects tax breaks for broadband

The Government has rejected the use of tax breaks to stimulate investment in broadband networks in the UK.

The final report from the Broadband Stakeholders' Group (BSG) published today calls for Government to introduce some kind of fiscal measures to help reduce the cost of capital investment.

The BSG argues that such measure would help the roll-out of networks in marginal areas - especially in less densely populated rural areas.

It claims that the current "risk averse financial climate and the aggregate debt of the industry" is hampering attempts to raise the necessary cash to invest in broadband.

Tax breaks, it argues, could help to free-up funds to invest in the technology.

However, responding to the final report from the BSG the Government said: "The Government does not believe there is a case for fiscal incentives to stimulate infrastructure investment as proposed by the BSG.

"The Government believes that the use of the tax system to support particular types of investment should be limited to cases where there is clear evidence of market failure, sufficient to justify the costs of intervention, and the tax system is judged the most effective instrument for achieving policy goals.

"The Government does not believe that the criteria apply in this case."

However, addressing those businesses that have so far been reluctant to adopt broadband services to help boost their competitiveness, the Government said that they should use existing tax breaks to help offset the costs of investment.

Douglas Alexander, e-commerce minister, said: "Too many people in the sector don't realise that there are a number of relevant initiatives including tax relief on establishing and maintaining broadband connections, that also apply to employers paying for connections at employee's homes."

Elsewhere, the Government said it would step-up awareness of broadband and encourage the rollout of hi-speed Internet services in rural areas through the promotion of companies sharing infrastructure. ®

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The First Report of the Broadband Stakeholder Group and the Government's response

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