0 Theme: Network Tariffs and Choice Author: June 16, 2015

Walk the talk: Brussels shoots itself in the foot by contemplating a tax on innovation

Contrary to indications clearly given to operators at the start of its term of office, the Brussels government is contemplating passing a regional tax on mobile telephone installations. If this new tax is confirmed, it will have to be regarded as a sort of tax on innovation to discourage and hinder investments in mobile technology of the future in the Capital of Europe.

This plan which is currently under discussion, without any preliminary consultation with the operators, is supposed to bring in 20 million euros, i.e. 10 million for the regional budget and the equivalent raised by the region for the benefit of the communes. According to estimations made by BASE Company, this would cost at least double the sums currently requested by the communes via communal taxes on mobile installations.

Such a tax would immediately encumber considerable investments (and at source) which BASE Company has agreed for these next few years and intends to pursue in order to equip the country and its Capital with an ultra-efficient mobile network. Yet such investments are necessary to meet the constantly growing demand for mobile Internet from users.

A lack of coherence with regard to policies already initiated

BASE Company is even surprised that such an initiative is being taken in a context where people now acknowledge unanimously that new technology and mobile telecommunications are important to our economic activity and our society in general.

The various governments in Belgium are therefore all planning to develop ambitious plans and digital agendas and see this technology as a driving force for their economy. The government of Brussels therefore announced in its regional policy statement last July that it wants to make Brussels the digital capital. As for telecommunications minister Alexander De Croo, he now insists on the need for the country to make up ground as regards mobile Internet and has already announced his ambition to make Belgium a leading country regarding 5G in Europe.

The entrance of such a tax would be a complete contradiction of these policies.

… and other contradictions

This initiative is being taken in an already difficult context in Brussels.

Let’s remind ourselves that Brussels has the strictest normative framework in the world when it comes to emission levels. Even if it has relaxed slightly last year (from 3V/m to 6V/m), it will still be 50 times stricter than what is recommended by the WHO and European Union and what is applied by the vast majority of European countries. This excessive severity imposes another constraint on networks, since the standard obliges operators to intensify their networks and therefore increase the number of sites in order to hope for a network quality equivalent to that in other countries (see our last blog post: bit.ly/1dHw46P).

The more operators invest to add sites in order to guarantee people a quality network with fewer emissions, the more they will be taxed, and therefore penalised!

Not to mention the risk that this will be amplified considerably if the Constitutional Court decides at the end of 2015 that Brussels should revert to a level of 3V/m (an appeal is pending against the standard of  6V/m, see the same blog post).

 Why tax the future?

BASE Company wonders why the authorities continue to tax innovation and the technology of the future and at the same time try to artificially keep alive outdated models like the distribution of the paper press, which they continue to subsidise to the tune of up to a billion in the next five years?

If Brussels is in need of money, why not tax all companies or be bold enough to take the – most certainly unpopular – decision to tax citizens directly? Does the Region prefer to inflict this unpopularity on mobile telephone operators by subjecting them to an impossible choice either to renounce certain investments or passing on the amount of the tax to their clients?

Would the direct income which such a tax would represent for the regional budget compare with the regional economic loss caused by the adverse effect of the tax on the growth of mobile Internet? BASE Company doubts that the government has made this basic calculation, which is indispensable to such a measure, beforehand. That’s a pity, because it is in its own interest. A recent study has shown that one euro invested in the new high-speed networks would generate three euros of GDP and would generate one and a half euros of taxation and social revenue (see ADL study: bit.ly/1Fk3FcO).

Uncertain revenues

Add to this the fact that this revenue in the cash till of the Region and communes would still be uncertain. As a reminder, current communal taxation regulations are contested regularly by operators, who win their cases the majority of the time with Courts and Tribunals and, perversely, have caused budgetary uncertainty for the communes.

Two Walloon decrees which have established a similar purview to that proposed in Brussels have been the object of an appeal and quashing on behalf of operators and the federal government at the Constitutional Court.

From that time onwards, a budgetary uncertainty would hang over the Brussels purview in the same way.

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