We hear a lot about so-called “stealth taxes”, but it really does seem the Government is awfully keen to keep the broadband tax hidden from view.

The Government’s Consultation Paper on the 50p per month Landline Levy (to give its proper name) states:

“We expect that the duty will be passed down the supply chain by the line owners and subsequently by retailers to customers. There will be no requirement on owners or retailers to show the duty separately on their billing to end users.”

The Government says this is designed to “prevent costly systems changes for line owners”. But there’s another reason why the Government might be none too keen for BT and its ilk to reveal exactly where your money’s going.

“If line owners recoup the duty from individual users, whether through a separate item on the bill or by including it in line rental charges, this is further consideration for the service being supplied and is therefore subject to the standard rate of VAT.”

Yes folks, we’re being taxed on a tax. That’s really quite special.

A Government consultation paper on the so-called Broadband Tax admits that consumers and small businesses are likely to pay more than huge corporations.

The 50p per month charge will be applied to each landline that runs into a residential or business property, meaning that homes and offices with multiple lines will be taxed at least twice.

However, the Treasury's consultation paper on the Landline Duty (PDF) admits that big businesses will likely be hit with minimal charges because of the way the tax is structured. "Large firms usually have bespoke telecommunication solutions," the paper states. "For example, large offices or call centres may only have a single high capacity fibre connection and therefore could pay as little as 50 pence per month."

Small or medium-sized businesses that have more than one line running into their offices will be forced to pay the £6-per-year duty on each line. That creates the ridiculous situation of, say, a small estate agent's office with three telephone lines paying more than BT's London headquarters.

The Government's consultation paper claims that "it is unlikely that any office would have a substantial number of lines as it becomes more cost effective to have a bespoke solution."

Nevertheless, it admits "there is an imperfect relationship between the amount of duty paid and the size of the business in terms of number of employees. We expect that in general larger firms will have a higher exposure to the new duty than smaller ones."

Dead lines taxed

There's further bad news for businesses that have been forced to downsize during the recession - lines that are no longer active will still qualify for the 50p charge.

"The duty will be payable on all local loops that are made available for use by an owner whether or not the lines are actually used," the consultation states. "It will also be payable on all local loops regardless of whether the loop consists of a copper pair, a co-axial cable or a fibre connection."

However, customers of Virgin Media - who receive their broadband over coaxial cable and their telephone over a separate copper line - will only be asked to pay once.