23 May 2015

Telecommunications tax will hit consumers

5:32 pm on 23 May 2015

Telecommunications companies are warning customers will end up paying for a shock tax hike in the Budget to fund an extension of rural broadband.

Spark's headquarters in Auckland

Spark's headquarters in Auckland Photo: RNZ / Kim Baker Wilson

The Telecommunications Forum, which represents companies, said the Government had pushed through the law change under urgency, to avoid public scrutiny.

Its chief executive, Geoff Thorn, said the industry could no longer afford to absorb the $50 million annual levy, which was introduced in 2011 and supposed to be reduced to $10 million next year.

It is being debated under urgency and looks set to be extended until 2019.

However, Communications Minister Amy Adams said companies had incorporated the levy at the top level into their costs, so there was no justification for prices rises.

She said continuing at the current level until 2019 would ensure the industry invests in remote areas.

Telecommunications provider Spark said the unexpected tax will have to be passed onto customers.

Its general manager of corporate relations, Andrew Pirie, said the company hadn't factored the additional tax into its long-term plans.

He said the company hoped to clearly mark the increased costs on its customers' bills.