Use extra VAT cash for net blackspots

PLANS to increase the VAT on internet-telephone and television packages have sparked calls to use the extra cash to improve internet access in regions with poor networks.

The Association des Régions de France (ARF) says it is “in the front line for developing internet access” and has been the heaviest loser since the taxe professionnelle was dropped. It needs help to make progress.

Budget minister François Baroin said VAT on the triple-play packages would increase because of pressure from the European Union.

At present VAT is charged at 5.5 per cent on half the package and 19.6 per cent on the other half. However, the EU says the reduced VAT rate should apply only to the TV part of the contract and Mr Baroin said the 19.6 per cent rate would now apply across the whole package.

The EU says the change should not have any effect on consumers because ISPs have not been passing on the savings; however, Maxime Lombardini of Iliad (which owns Free/Alice) said it would have a “direct impact on consumers’ buying power as the ISPs could not avoid passing on the charge”.

Martin Bouygues, of Bouygues Telecom, said: “We will adapt. It is more expensive and we will see who pays; either the business or the business and the customer.”

ARF spokesman Martin Malvy said: “This new tax should come to the regions because they have been badly hit by the reform of the taxe professionnelle.”

His colleague, Christian Paul, who chairs the ARF information technology group, said they needed to invest billions of euros in creating a very-high bandwidth internet network.

A study by Avicca, the group representing towns on information technology, said France needed to spend €1 billion a year for the next 20 years to try to get rid of internet blackspots.