Broadband tax to exclude low-income subscribers

Shadow culture secretary calculates 200,000 will not be able to afford internet access after 50p tax

The Tories have pledged to deregulate the market and encourage private sector investment

Tory shadow culture secretary Jeremy Hunt has claimed the government's 50p-per-landline tax to fund the universal provision of next-generation broadband could exclude more than 200,000 low-income subscribers from the internet altogether.

Hunt's calculation regarding the economic impact of the tax comes after Gordon Brown's speech yesterday which laid out new plans for Labour's digital Britain.

One pledge made was to ensure superfast broadband is available to 100 per cent of the population (a previous pledge had promised access to 90 per cent).

Critics said that Brown had given no details on how universal coverage would be achieved without further funding, while he claimed Conservative plans would leave the spread of superfast broadband to the mercy of market forces.

Hunt estimated the impact of the tax by scaling up the government's estimate of the economic impact of the Digital Economy bill, which suggested an extra 40p on broadband costs – £1.40 per year – resulting from requiring ISPs to tackle online piracy, would reduce demand for broadband by 10,000 to 40,000.

The Tories claimed Stephen Timms, the Treasury and Business Department minister responsible for Digital Britain, had refused to commission a separate impact assessment for the telephone levy, which Hunt assumed would be grossed up for VAT to £7.05 per year. This is despite what the Conservatives claimed were "widespread concerns" about the effect of the levy on poorer subscribers, many of whom do not have and would be unlikely to want an internet connection.

Hunt said: "The phone tax is misguided, dangerous and unnecessary, which is why we have pledged to scrap it.

"The government's own figures suggest that this tax will make the internet unaffordable for hundreds of thousands of people and will penalise low-income families.

"This makes a complete mockery of Gordon Brown's boasts about promoting universal access."

He pledged: "We will deliver nationwide superfast broadband by 2017 without the burden of extra taxation by deregulating the market and encouraging private sector investment. We will also consider using a proportion of the licence fee dedicated to digital switchover to ensure there is no digital divide."

He said a Tory government would legislate for "a right to government data", create a level playing field for open-source IT and "end Labour's culture of massive IT overspend and waste".