Silly, silly

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.

9 thoughts on “Silly, silly”

  1. It’s just progressivism in action. They see anything- a business, a hobby, a passing sparrow, and the first thing they ask is, “Do we regulate this thing?” and if the answer is no, they then immediately move on to “How do we regulate this thing?” without ever asking, “Do we need to regulate this thing?” because Regulation Is A Universal Human Right.

    And then they ask, “Do we tax this thing?” and if the answer is no, they then immediately move on to “How do we tax this thing?” without ever asking, “Do we need to tax this thing?” because Paying Taxes Is A Universal Human Right.

    The primary equality they seek is equality of regulation and tax; that which is not regulated and taxed is missing out, and presumed to be terrifyingly out of control. They’re insane.

  2. This is also a classic illustration of public choice theory- the concentrated interest versus diffuse costs. Everyone has to pay six pounds per year- it’s not much, and unlikely to inspire crowds marching in the street demanding the overthrow of the government. Most people will not do much to save six pounds per year as the opportunity cost of trying to overthrow this law is much greater than the saving (six pounds) that can be achieved.

    But the special interests gain a great deal. If there are fifty million phones in the uk (I have no idea, but about one per person seems reasonable) that is £25M per month or a whopping £300M per year that the rent seekers have successfully captured from the general mass of the population.

  3. From the Digital Britain Report:

    From the analysis of fixed line subsitution we have been carrying out I would I expect to see more if this idiotic tax is applied.

    56. At wholesale level, the UK currently has the second cheapest prices in Europe
    for broadband only DSL, the third cheapest for voice and broadband DSL, and
    the fourth cheapest for voice line rental. ADSL prices for a 10MBps service can
    be as low as £5.99. The cost-based basket of wholesale prices for today’s
    copper-network has fallen by £8 per line per year in real terms since 2005.
    Over the same period the retail price for combined voice and broadband has
    fallen by around £90 per annum in real terms.
    57. Against that background, the Government believes that it is right to share a
    small part of that saving, and that a Next Generation Fund supplement of 50p
    per month on fixed lines represents a fair and sensible national investment to
    ensure that the overwhelming majority of the country can get access to next
    65
    A Competitive Digital Communications Infrastructure
    generation broadband. Low income households – those on social telephony
    schemes – would be exempted.
    58. Over time there has been modest fixed line to mobile-only substitution.

    Even so, a supplement of 50p per month can be expected to raise
    £150m-£175m a year for the Fund. This amount might be sufficient to make
    investment in connecting most of the Final Third by 2017 as commercially
    viable as connecting the first two thirds of the population.

    http://www.culture.gov.uk/images/publications/digitalbritain-finalreport-jun09.pdf

  4. From the Digital Britain Report:

    From the analysis of fixed line subsitution we have been carrying out I would I expect to see more if this idiotic tax is applied.

    56. At wholesale level, the UK currently has the second cheapest prices in Europe
    for broadband only DSL, the third cheapest for voice and broadband DSL, and
    the fourth cheapest for voice line rental. ADSL prices for a 10MBps service can
    be as low as £5.99. The cost-based basket of wholesale prices for today’s
    copper-network has fallen by £8 per line per year in real terms since 2005.
    Over the same period the retail price for combined voice and broadband has
    fallen by around £90 per annum in real terms.
    57. Against that background, the Government believes that it is right to share a
    small part of that saving, and that a Next Generation Fund supplement of 50p
    per month on fixed lines represents a fair and sensible national investment to
    ensure that the overwhelming majority of the country can get access to next
    65
    A Competitive Digital Communications Infrastructure
    generation broadband. Low income households – those on social telephony
    schemes – would be exempted.
    58. Over time there has been modest fixed line to mobile-only substitution.

    Even so, a supplement of 50p per month can be expected to raise
    £150m-£175m a year for the Fund. This amount might be sufficient to make
    investment in connecting most of the Final Third by 2017 as commercially
    viable as connecting the first two thirds of the population.

    http://www.culture.gov.uk/images/publications/digitalbritain-finalreport-jun09.pdf

  5. Just curious, once the “Final Third” have the ability to be connected …. will the tax then be repealed?

  6. I love the way “fair” and “sensible” are merely asserted, with not even an attempt at justifying these words. Rather like Gordon’s incessant growl “it is right to do so” – as if repeating endlessly makes it true.

    My rule of thumb: be wary of anyone using the word “fair” because it usually signals something unfair is coming down the tracks (just as “to be honest” signals “I have not been telling the truth”).

  7. “Just curious, once the “Final Third” have the ability to be connected …. will the tax then be repealed?”

    You mean, the way the fees were waived on things like toll roads and bridges once they’d been paid for?

    Oh, wait…

  8. Haven’t the “early-adopters” already subsidized the rest by enabling providers to reduce prices (in the same way that cell-phones, which once cost £3,000 are now virtually disposable)?

  9. |The logical connection between the two lies in the politicians’ confidence that much of the public is stupid enough to fall for the con.

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