If the tax REALLY meant that we were free to download whatever we wanted, and the RIAA / MPAA extortion tax had already been paid, we could do away with all the ISP torrent throttling / shaping, and all the frivolous lawsuits (which lets face it, we pay for anyway in terms of other taxes).
Unfortunately that's not what the government intend. This proposal is to set up a new agency that will pursue filesharers on behalf of the RIAA/MPAA MAFIAA. Why this agency needs £20 from everyone in the entire country is beyond me.
If the UK does have a broadband tax, a better idea would be for it to fund creative works such as music/film/books/software/etc and where each taxpayer decides what sort of works their tax goes to fund. I've written this proposal up in more detail:
One possible solution would involve the creation of a series of Content Compensation Funds. A CCF would be a special type of legal entity that would be authorised to spend the money raised by a broadband tax. I envisage that legislation would be needed to create the legal basis for CCFs.
A CCF might be an existing entity repurposed to the task, such as the big four music companies, performance rights organisations, and TV companies such the BBC or ITV. Maybe the Free Software Foundation could act as a CCF to fund software. Perhaps an authors' society could fund money towards authors. It may be that new organisations are created to be CCFs. I envisage that there might be between 20 and 100 CCFs.
A CCF would be authorised to spend its budget funding content creators either for works that've already been created (the "funding post creation" model) or commissioning new works to be created (the "funding pre creation" model).
The clever bit is how the broadband tax would be distributed among CCFs. Everyone with broadband would be required to pay a monthly broadband tax. This might be a fixed amount for everyone (e.g. £5 a month) or it might vary according to the size of the broadband bill or the speed of connection. But either way, each taxpayer would decide which CCF or CCFs their payment goes to.
So Alice who likes music might channel 100% of her payment to a music-based CCF. Bob, who likes TV programmes and computer games, may channel 50% of his payment to an audiovisual CCF and 50% to a games software CCF. And Carol, who likes reading SF, may channel her payment to a science fiction CCF that commissions new science fiction works (which may be books, films, etc).
It's often said, particularly in the USA, that the newspaper industry is dying. That may be true of newpapers printed on dead trees, but there's still an important role in organisations that gather news. One can imagine newspaper CCFs (perhaps based on existing newspapers) that perform this role. They'll be web based, and their output won't be restricted to text and still pictures.
Because there will be lots of money in the system (if 15 million broadband subscribers each pay £5 a month, that's £900 million a year) there is the potential for fraud and waste. The "payer decides" system minimises that: if a CCF gets a reputation for being corrupt or for wasting most of its income, its income stream will quickly dry up. (Payers will be able to easily change the allocation of their payment every month via an Internet-based system). In this way CCFs will be responsive to market forces.
There would need to be other safeguards against people trying to game the system. For example a CCF might offer to give a taxpayer a reward of £2.50 for every £5 channeled their way. Any such inducement would have to be illegal. More broadly, a detailed record of a CCF's accounts should be public and on the web (because essentially all large transactions are done electronically, this could be done without extra administrative cost, because it would be built into the accounts software the CCF uses). If a CCF knows their dealings are public, they will be less willing to commit fraud, and more likely to be caught if they do.
Another safeguard against fraud is that all CCFs would be monitored by the relevant government department. To set up a CCF one would have to pass various requirements. They shouldn't be enormously difficult, but nor should they be absolutely trivial. The more CCFs, the better, because it gives payers more choice in where to channel their broadband tax, and makes CCFs work harder in attracting payers' money. But also the more CCFs, the worse, because the more of them that there are, the harder they'll be to regulate; in the eaxtreme case if everyone is allowed to set up a CCF what's to stop Alice setting up one and paying her £5 a month to it? Or if that's banned, Alice and Bob could do a deal where they each pay into each other's CCF. Where to draw the line between between too easy creation of a CCF and too difficult is something that would have to be determined by trial and error.