In a statement issued prior to a parliamentary hearing on broadband speeds in the UK by the Business, Innovation and Skills (BIS) Committee, Dunstone argued that the tax would fall disproportionately on low income households, and he predicted that at least 100,000 would be forced to give up their broadband lines as a result.

“This is an unjust and regressive tax on all phone customers which will subsidize mostly richer rural households that can afford high priced super fast broadband services,” stated Dunstone, going on to note that: "This is wholly inconsistent with the government’s plans to tackle digital exclusion by increasing uptake and use of broadband."

The broadband tax was announced by the government in September as a means to fund recommendations in the "Digital Britain" report, published in July.

According to Treasury Minister Stephen Timms, who is in charge of implementing the Digital Britain project, the tax will equate to an annual charge of GBP6 on each home with a phone line, regardless of whether the line is operational, which he expects will raise between GBP150m and GBP175m per year.

It is thought that the tax will be in place for 7 years starting in 2010 and will therefore raise more than GBP1bn, to be invested in upgrading the country's broadband infrastructure.

However, Dunstone is of the view that, ironically, the presence of this money will merely delay the roll-out of next generation broadband in rural areas because "private investors will wait for public funds to be made available".

"This will mean that much of the tax will be wasted investing in networks that the private sector would have built themselves anyway," he suggested.

The company's concerns about the proposed tax were also outlined by TalkTalk’s director of strategy and regulation, Andrew Heaney, during the BIS hearing on November.

Chief among the company's concerns was the fact that the government has included the levy in the 2009 Finance Bill without consulting the public or the industry.

“We now need to let the private sector drive next generation broadband as far as it can," continued Dunstone.

"Public funding at this stage – in what appears to be an effort to ‘keep up with the Joneses in Korea, Singapore and the Netherlands – is simply going to waste customers’ money and slow down roll-out."

“To tax all phone customers is not even robbing Peter to pay Paul, it’s just robbing Peter," Dunstone concluded.