Broadband tax edges closer to reality

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Broadband tax edges closer to reality

As long as some ministerial powers are wound back.

The senate committee examining the broadband tax has dismissed industry concerns of scope creep and recommended it be passed into law.

The committee today said it had been convinced by “counterpoints made by the Department [of Communications] and NBN Co to industry arguments” and found the government’s version of events “more compelling.”

The move is a major setback for the telecommunications industry, large portions of which were caught out by a quiet change in wording that would tax corporate and enterprise services, not previously considered as competition to the NBN.

NBN Co surprised many during the process by claiming the success of the broadband tax was predicated on it applying to “all business services”.

Previous corporate plans have not specifically said NBN Co would target the enterprise market. However, the network builder is increasingly looking outside its mandate in order to plug holes in its financial model.

The committee - made up of two LNP, one National Party, two ALP and one Greens senator - noted that opposition to the introduction of a new tax would be expected.

“As a general rule, the introduction of an industry charge is unlikely to receive universal stakeholder support and can attract points of view influenced by particular commercial interests,” it said.

“Nevertheless, the committee has been receptive to the various arguments relating to the RBS [regional broadband scheme ‘tax’] made by industry stakeholders.”

However, it concluded that “the approach taken by the government as outlined in the bills is the most appropriate method for achieving the objectives of the proposed [tax] with minimal market distortion.”

The government did not get completely its own way on the tax, however.

Before the senate considers it, the government could be forced to wind back some of the powers it is attempting to give Communications Minister Mitch Fifield around the tax.

Those powers could allow Fifield to alter the amount of the tax without needing parliamentary approval.

The committee was also concerned that another procedural power afforded to the minister ran counter to the Legislation Act.

If those problems are solved, the senate is likely to vote on the package of bills that include the introduction of the broadband tax and other less controversial change to telecommunications law.

The committee noted, however, that a short delay in the introduction of the broadband tax may be entertained, particularly if the laws take a long time to pass.

“To provide industry with certainty, the committee urges prompt consideration of the bills with final consideration of the bills to occur as early as possible during the 2017 spring sitting period,” the committee said.

“Should this not be possible, however, the government should consider a short delay in the commencement of the [broadband tax] regime.

“The committee notes that the [tax] charge could be subject to minor adjustment to ensure that a delay would be revenue neutral.”

The broadband tax starts at $7.10 per line per month. NBN users will not pay more for their services, according to the government; the tax is already embedded in the NBN wholesale price.

Telcos that offer services deemed NBN competitors - both residential and business - will have to pay the tax on any line capable of speeds greater than 25 Mbps.

It is likely such telcos - for example, TPG and Opticomm - will need to pass on some or all of the charge to end users, though opinion is divided to what extent they might need to absorb the cost to remain competitive.

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