By: MarkJ - 23 June, 2010 (1:10 AM) - Score: 11669 - Special Offers
The UK governments Chancellor, George Osborne, has revealed plans to increase the rate of Value Added Tax (VAT) from 17.5% to 20% from 4th January 2011. The increase will raise £13bn a year to help plug the national debt. Much as you would expect it will also hit the price that we all pay for our broadband services.There's a small consultation to be had in the fact that the new government confirmed it would scrap Labour's 50p per month tax (Next Generation Fund) on all fixed phone lines, but then that was already a foregone conclusion. The VAT rise, while necessary, will hit all your services.
Elfed Thomas, CEO of fibre optic infrastructure specialist i3 Group UK, commented:
"We are delighted that this new coalition government is continuing its positive response to developing next generation broadband by dropping the ludicrous and unfair tax which had been proposed by the previous Government.
Rather than encouraging companies like ours to provide an infrastructure for next generation services, the tax would have driven innovation out of the UK and created an uncompetitive market. This would have resulted in both service providers and consumers losing out.
The private sector is perfectly well placed to deliver next generation broadband – as we are already demonstrating through our Fibrecity network, the UK’s largest fibre to the home initiative which will connect one million homes over the next four years."
"We are delighted that this new coalition government is continuing its positive response to developing next generation broadband by dropping the ludicrous and unfair tax which had been proposed by the previous Government.
Rather than encouraging companies like ours to provide an infrastructure for next generation services, the tax would have driven innovation out of the UK and created an uncompetitive market. This would have resulted in both service providers and consumers losing out.
The private sector is perfectly well placed to deliver next generation broadband – as we are already demonstrating through our Fibrecity network, the UK’s largest fibre to the home initiative which will connect one million homes over the next four years."
Those seeking to retain the benefit of a lower VAT rate before January next year might find pre-paying for longer contract options to be attractive. However we always recommend caution with those and suggest only considering such a move when you are confident in the ISPs quality.
UPDATE 11:37am
Added a quote from i3 Group's CEO about the dropping of Labour's 50p phone line tax to fund next generation broadband services. The new government plans to gain slightly less cash from the BBC Licence fee's Digital Switchover budget instead.
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Comments: 7
VMPosted: 23 June, 2010 - 3:58 AM
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What a bloody useless increasing of VAT. Why on earth they taxes more out of the rich peoples salary like 60% income tax for those who earning £120,000 a year or more. Why the rest of us (poorer) had to suffering again.
Tories is lies as they told me at pre-election that they won't increasing VAT. Another lies.
So, 20% VAT for broadband isp, plus another 20% VAT for BT line rental. We would end up paying an average of 5% VAT on top for broadband with telephone line that will cost more than 50P phone tax !
timelessPosted: 23 June, 2010 - 5:55 AM
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thank you very much now my family and l will find it all that much harder to survive... tho on the up side l hear fuel, alchol, and cigarettes are supposedly to be exempt from the increase.. which is something l guess.
Martin Pitt - Aquiss InternetPosted: 23 June, 2010 - 7:33 AM
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VM, you will pay a 2.5% increase. No averages or 5.0% :p
MarkJPosted: 23 June, 2010 - 7:50 AM
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From history putting a big tax (60%) on the highest earners has resulted in less revenue. There is a cut off point where taxing people too much results in less cash because the wealthy find it then becomes more economically viable to move their money elsewhere; lots of ways to do that. Likewise you don't want to discourage rich people from moving here as they are often the ones who invest and setup new businesses.
Tax is three dimensional so you can't really adopt a one-size fits all approach, although if you do then sadly VAT is the easiest solution. None of us have a choice in VAT though and it will hurt everybody. Personally I thought it was crazy to reduce it last year to 15%, just leave VAT alone :( . Thanks to the banks, USA and Labour for this mess.
ChrisCPosted: 23 June, 2010 - 10:01 AM
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VAT increase is annoying. I am tired of Britain being a soft target for people who don't want to work or get on in life.
I started in a dead end job and no support from family I now own my own company and although in recession we are holding ourselves up. But I hate the fact my taxes pay people to do nothing, put a roof over their heads and allow them to have nice cars and sky TV.
Stop paying all DSS, put the money back into industry, we should and can manufacture most things in this country. Make us a force to be reckoned with world wide. If everyone had a job and is paying income tax & Vat the rates could come down by half.
As a country not paying DSS we wouldn't have illegal immigrants and asylum seekers because there is nothing for them here! Its simples, and doesn't take a rocket scientist!!
Britain doesnt need hangers on!
Stealth_WormPosted: 23 June, 2010 - 11:31 AM
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Wait, the government made a pre election promise, and didn't stick to it? What ever next.
Hmm, I wonder how much it's costing to keep the troops in Afghanistan etc? Imagine how much has been spent invading Iraq, because governments claim it's in out best interest, to keep the imaginary terrorists away.
Previous leaders sent in the troops, we and the troops are still paying for it, with their lives and our money. All the protests from people around the country, and yet the Gov, still sent in the troops. They wonder why politicians are not trusted.
I'm sure quite a hefty chunk of money could be saved by bringing the army back, but why do that? Better to just up the taxes.
Leon WolfesonPosted: 24 June, 2010 - 11:31 PM
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"Necessary". Since when did this site indulge in political advocacy? If you want to drive me away, do it again.
So instead of a 50p increase, I'll be getting a 63p increase. Or probably £1, given, well ISP's. Shame about the entire rhetoric about the tax requiring people to drop their connections...
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