Government is seeking telecoms levy to finance broadband internet services for schools.
A Government plan to introduce a levy on telecoms firms to pay for the roll out of broadband internet services to schools may not be legal following a ruling by the European Court of Justice.
In a landmark ruling last week, the court said existing EU rules prohibited member states from imposing fees on telecoms firms which did not directly relate to cost of regulating the market.
The decision is likely to prove a major hurdle for the Government which is currently working on legislation to enforce the levy.
A spokesman for the Minister for Communications, Mr Ahern, who is proposing the telecoms levy, said yesterday the Government was studying the ruling.
But he said the Government was committed to pressing ahead with its work on the legislation for the telecoms levy regardless.
The Government formally approved the levy in July in a drive to raise up to €60 million to pay for the roll-out of broadband internet services to every Irish school over a five-year period.
Minister Ahern has said rolling out broadband to schools would increase demand for the high speed internet service, thereby benefiting telecoms firms. But the industry has vigorously opposed the levy and described it as a new stealth tax on industry.
The new EU court ruling originated from a challenge by two Italian telecoms firms against the imposition of a new state levy on their turnover. The court found that the only charges allowed by the EU telecoms directive were those to pay for: regulation; use of scarce resources; and for the universal service obligation.
The court also said the EU's common framework for telecoms services would be rendered redundant if individual member states were free to establish financial charges on firms.
IBEC's Telecoms and Internet Association (TIF) said yesterday the judgment vindicated its strong objection to the proposed levy on Irish telecoms and internet firms, which was unfair, unjust and a discriminatory tax on one particular industry sector.
Mr Tommy McCabe, director of TIF, said the judgment confirmed that EU member states could only impose charges on the telecoms sector under strict conditions that were in line with liberalising the telecoms market.
He said TIF and the Government were still engaged in discussions on the proposed telecoms levy to try to seek solutions to facilitate e-learning.
It is understood industry has been preparing a compromise proposal over the telecoms levy in an attempt to stop Government imposing a tax. This may include some element of a voluntary contribution to the cost of providing a broadband service to schools.
However, TIF would not release any details on these discussions with the Government yesterday or how they would be affected by the new court ruling.
