By: MarkJ - 25 October, 2009 (11:00 PM)
wireless mastThe Valuation Office Agency (VOA), which compiles and maintains business rating and council tax valuation lists for England and Wales, is reportedly getting ready to impose business rates (property tax) upon wireless networks (e.g. wi-fi masts, not end-user networks). The move has raised concern because many community wireless broadband ( Wi-Fi , WiMAX ) ISPs operate off already thin margins and usually inhabit niche markets (remote and rural areas).

Those familiar with the industry will already know just how damaging the governments current tax on fibre optic networks has been, making it far more costly than it should be to deploy next generation broadband around the UK. To impose a new tax upon wireless networks could make matters worse and threaten the governments own goals of digital inclusion (Digital Britain).

The proposed move, which was first spotted by Fibrevolution, has caused anger and confusion among wireless ISPs who fear that such a tax could become a major hindrance and might even cause some operations to close. The change could even be retroactively applied back to 1st April 2005. However the VOA informs us that such reports are "wrong" because the tax itself is nothing new.

A VOA spokesman told

"It is not correct to suggest a new tax is being introduced for wi-fi installations. All business property is liable for rates, which are based on rental value. Wi-fi installations are not treated any differently to any other business property.

There are currently over 31,000 mast assessments in the rating lists and valuation officers are working proactively with WiFi operators to ensure they have accurate information on all wi-fi sites. There has been no change in rating policy for wireless installations and any suggestions otherwise are wrong."

FREEDOM4, a well establish wireless ISP that makes use of the latest WiMAX and Wi-Fi technology, also appears to confirm the VOA's stance that rating of wireless installations is technically nothing new. However they remain equally scalding of the fact that such rates exist at all.

FREEDOM4's COO, Graham Currier, told

"We too have seen all sorts of rumours and lots of copy talking about this but we feel a little short on established fact. For F4, this is an interesting debate but not particularly business affecting because we already incur business rates for our main radio sites and this VOA proposal is aimed at local access points.

We cannot comment on the validity of this as a tax raising mechanism as this is a matter for public policy but it does look clumsily targeted and is disincentive to small players attempting to enhance the broadband experience for particular locations. I would have thought that the objectives of Digital Britain should be consistent with related tax and rating issues.

F4 now has WiMAX; a purpose built wireless broadband data network, this technology may be better able to help communities having difficulties with current fixed and wireless players but it is also dependant on providing initial coverage."

According to the director of Fibrestream Ltd., Guy Jarvis, the issue is to some degree a matter of semantics. Jarvis informed us that what the VOA says about the Wireless Window Tax not being new is correct, but only in the sense that "it is not something that has been specifically introduced to target WiFi networks or similar."

Guy Jarvis, Director Fibrestream, told

"The real issue is why these networks (or indeed NGA community FttH for that matter) should be subject to business rates at all when they are often the results of a local community being let down by the “big boys” and having to organise their own telecoms affairs in the interests of the general public good.

To be fair to VOA, they do not set taxes per se rather they are tasked by Government to work out the rateable value of assets that can then be taxed if HM Treasury chooses.

This therefore is an issue for Government to carefully consider, in the context of how much additional economic activity these networks create that then becomes taxable vs taxing the community interest at source and therefore creating the unintended consequence or blowback of stopping the innovation that generates the GVA (Gross Value Add) uplift in the first place.

From a UK PLC perspective, surely it is better to first create digital wealth for future taxation than to tax today’s digital paupers?"

Unfortunately many governments have historically made the incorrect assumption that increasing or imposing new taxes will directly result in extra revenue, yet this is often not the case. In some situations a tax can be so prohibitive to building new infrastructure that what you get back may be far less because many opportunities will go unexploited.

UK Wireless networks are fast becoming crucial for the delivery of broadband services to remote and rural locations via Wi-Fi , WiMAX and Mobile Broadband . Any tax upon these services, especially those affecting the smallest of players, should perhaps be seriously reconsidered.
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Comments: 11

asa logootester
Posted: 26 October, 2009 - 1:04 AM
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Well anything good in this country must be taxed to death.

Such a shame.
asa logo125667231
Posted: 26 October, 2009 - 11:13 AM
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Soon they will impose a tax tax tax I can't wait cheese
asa logo125667231+1
Posted: 26 October, 2009 - 11:17 AM
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"Soon they will impose a tax tax tax I can't wait"

VAT. You earn money (on which you pay tax) and then you spend money (on which you pay tax).
asa logoChris
Posted: 26 October, 2009 - 12:29 PM
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Horribly written, confusing article. What is actually being taxed here? Rates tax premises, not wireless networks. From the article it sounds as if turning on a WiFi router in a house will make it liable to business rates and then turning it off will make the building tax-exempt.

Since this is presumably not the case, you might want to explain what the proposals would levy tax on.
asa logoMarkJ
Posted: 26 October, 2009 - 1:01 PM
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Added an extra bit of text to clarify, although the article reflects the confusion that surrounds this issue. We tried several times to gain a clear answer from the VOA but this proved rather difficult. But to be clear, it is the network infrastructure (masts with wi-fi kit on etc.) and not end-user services. The quotes include most of the needed explanation.
Posted: 26 October, 2009 - 6:24 PM
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We are about one of the oldest WISPs in the UK and in over ten years we have seen many wireless companies disappear and not usually because of any taxes or licence fees. All aspects of our fibre, microwave and wireless links whether at purchase or running attract some formm of tax, it is a fact of life, but we still manage to provide our villages with 10mb synchronous for 30 a month!
asa logoSteve
Posted: 26 October, 2009 - 7:21 PM
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What is being taxed? Wifi/wimax Masts or wifi hotspot routers in idividual premises?
asa logoJules
Posted: 27 October, 2009 - 8:28 AM
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The real issue is why these networks (or indeed NGA community FttH for that matter) should be subject to business rates at all

Well, yes. They should probably register as charities, who are exempt from business rates.
asa logo125667231+2
Posted: 27 October, 2009 - 8:40 AM
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You earn money, which is taxed.

You buy petrol, which has an awful lot of tax on it - and this tax is liable to VAT, so you're directly paying tax on the tax - out of money that has already been taxed.
asa logoCynic
Posted: 27 October, 2009 - 9:56 AM
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Looks to be just a scare story being put out by people famous for inaccuracy and self promotion. I doubtany community networks pay business rates unless they happen to have non-domestic premises and charitable status (if elegible) would sort that.
asa logoMarkJ
Posted: 27 October, 2009 - 10:13 AM
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Many community networks still have to be put together by commercial businesses, so there is usually no way to escape a property tax because they cannot register as a charity.

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