Speaking to MPs in the House of Commons, Mr Bradshaw, the Culture Secretary, confirmed that the small levy would establish an independent national fund to ensure “maximum next generation broadband coverage”.
The report proposed a 50p-a-month levy on all fixed telephone lines to help bring next-generation broadband to the whole country.
Hypothecated taxes are always a bad idea.
There is no link at all between what can be usefully raised from taxing one activity and what it is necessary to spend upon another.
If it\’s a good idea to tax landlines then it\’s a good idea to tax them. Then we should work out what is the correct amount to tax them. What is the elasticity here? Why are we taxing them? Just because we can or is there some externality we are compensating or? That\’s what should determine whether and how much the tax should be.
Similarly, the spending upon universal broadband (not that I think the basic idea is sensible but that\’s another matter). What do we actually need to do? How much money is necessary?
There is simply no logical connection between these two things at all.
Taxes should go into one pot and then be disbursed from one pot: tax when and where you can or need to and spend where you need to.