Tax on SMS revenues to plug UK’s financial deficit?

Text messages have been implicated in many unusual things, including; notifying staff of work place redundancies, providing step-by-step instructions to doctors performing life saving surgery, causing repetitive hand strain injuries amongst teenagers, and even blamed for children being born with oversized thumbs!

Now, according to Nick Leeson, a tax on the 80 billion text messages sent in the UK every year could be levied to plug some of the holes in Alistair Darling’s budget deficit this coming Wednesday, and would help save the UK economy from further meltdown.

In 1995, rogue trader Leeson left a $1.4 billion USD financial hole in the accounts of Barings bank, leading to its eventual collapse, and him going on the run. At the time, poor internal controls and lack of risk management procedures were to blame across the banking system.

It’s strange how history always has a habit of repeating on every level! So, before Chancellor Darling goes on the run at the next general election, perhaps he might take advice from a man who knows a thing or two about empty financial holes, and levy a tax on SMS messages?

Lee Scargall
Lee Scargall
Lee is a senior risk management professional. He has extensive experience of managing both ERM and RAFM teams in telcos around the world, having worked for Ooredoo Group, Cable & Wireless and T‑Mobile UK.   Lee earned a PhD in Electrical and Electronic Engineering from the University of Newcastle upon Tyne, UK, for advanced research in to 3G video-telephony.
  • Taxing SMS messages has been proposed before. The Philippines government considered it, but decided it would be too unpopular. A French Member of the European Parliament suggested it might be a good way to finance the EU budget, but thankfully nobody else did.

    The problem with taxing SMS is that it is too obvious to the end consumer. There are better ways for governments to use telecoms to take money from its citizens without them ever noticing. For example, there are plenty of governments who ban international VoIP just so they can generate huge returns by exploiting the state-owned provider’s monopoly on their nation’s international gateway. That, however, is the old-fashioned way of making money from telecoms consumers. The smart governments use competition as the mechanism to make money – for example by auctioning limited amounts of radio spectrum. In the UK, Gordon Brown raised a cool UK£22bn from the auction of 3G spectrum at the peak of dotcom-boom inflated share prices, when none of the major providers would have dared to be left without a 3G licence for fear of being punished by the stock market. Ever since we have seen the operators back-pedal, as they realize that 3G was not an economic investment, and try to reduce costs with initiatives like network sharing. So who ultimately paid that UK£22bn? A combination of shareholders (e.g. ordinary people with pension plans) who received lower dividends, and customers who have been paying more for ordinary 2G calls ever since. And what did Gordon Brown do with that enormous one-off bonus received by the treasury? Did he spend it? No. Gordon was prudent and he used the UK£22bn to reduce the national debt. Those were the days… ;)

  • Hi Lee,

    Good to hear from you – it’s been a while since sharing a lift back to Hatfield Station…

    One of the things which I find suspicious about the timing of this publicity is that this has been all over the news in Dublin for weeks now, as a suggestion to plug the even-larger % hole in the Irish economy. What goes around, comes around, and someone sees an opportunity to generate a little noise, and maybe a little diversion from the real “stealth” increases in taxation which will be needed to balance the books.


    PS Eric – As I write from the Middle East myself, the point about inflating call charges by blocking VOP is certainly not lost on me these past few days!