Australian Communications and Media Authority developed a proposal to modify its approach to setting spectrum licence taxes. ACMA is looking into tying these taxes to population growth in various density areas. 

ACMA proposes to cease updating taxes annually based on the consumer price index (CPI). Rather, annual taxes will be adjusted based on the normalisation factors for high, medium, low, and remote-density areas. In parallel, these areas are linked to possible modifications based on their population. This proposal is included in the second tranche of tax reforms tied to ACMA’s Spectrum Pricing Review.

This proposal came after it was highlighted that the current approach tying taxes to the CPI treats all licences equally, resulting in a disadvantage for companies pursuing operations in lower-density areas. The fact is that the taxes are modified regardless of the demand for spectrum in a given area. With this system, the spectrum tax rates are increased uniformly by 19.35% from 2010 to 2020.

With ACMA’s proposed alternative approach, the taxes will increase by 21.69% in high-density areas, 14.68% in medium-density areas, and 12.2% in low-density areas. In remote areas, the taxes will increase by 6.58%. The country-wide average increase would then be 16.64%.

High-density areas will be classified as those with a population density of greater than 220 people per square kilometre, having an assignment density of more than 70 per square kilometre. This compares to more than 70 per square kilometre for medium-density areas and more than two people per square kilometre for low-density areas.

Along with the tax proposal, ACMA also plans to redraw the medium-density areas of Perth and Adelaide to cover a larger portion of the cities. In this case, the boundaries will be more in line with the high-density areas part of Melbourne and Sydney. In doing so, the two cities’ growth in population and geographic area will be better reflected. As a result, more coherent tax relativities for the metropolitan areas will be collected.

Still, in parallel to the tax proposals, ACMA is also proposing to amalgamate the three spectrum bands between 30MHz and 403MHz into a single band. This is to set the tax rates and present a new spectrum location band for services operating above 100GHz. The tax rates of this new band will be set at a minimum of $41.37 to encourage the development of services leveraging these wavelengths.