Unused phone lines to be subject to broadband tax

VAT is also to be applied, says Treasury consultation

The Treasury wants to tax unused phone lines, and plans to slap VAT on so-called "broadband tax"

Unused phone lines will be subject to the so-called broadband tax outlined in Lord Carter's Digital Britain report, according to a consultation released today by the Treasury.

The broadband tax has morphed into the Landline Duty, and the document proposes that all phone lines, even unused ones, should be subject to the tax as "where more than one local loop is provided in order for an end user to receive two distinct services, the duty is payable on both lines".

However, if customers receive services from two providers, "but over the same local loop, the duty is only payable once," states the proposal. If customers have both copper and fibre connections, again, the tax will only be payable once.

The Treasury expects the charges to be passed down the supply chain to customers. The tax will start in October should Labour win the next election. The document also says the charge "is subject to the standard rate of VAT," which will be 17.5 per cent in January 2010.

The consultation period will run from 11 December 2009 to 12 February 2010, with a summary of responses being published when the Budget is presented to Parliament.

The Conservatives have said they will scrap the tax should they win the 2010 general election.