introduction
impacts
byte tax
Australia
global
|
the byte tax
This
page looks at proposals for a
'byte', 'bit' or 'email' tax.
the proposals
Those taxes would essentially involve a
charge (by a national government or, in some of the more problematical
proposals, by a body such as the United Nations) on traffic over the
internet.
Internet service providers and telecom carriers would collect
a flat user fee, or a charge per 100 emails, or a charge by the quantity
of information sent/received (eg for internet telephony and video). What
would be charged, how the tax would be collected and how it would be
spent depends on which proposal you're considering.
Broadly, proponents argue that such a
tax will offset the erosion of traditional revenue collection as we all
go online or that it's a new, low-impact tax that can be used for
international development. Revenue would rise and fall in direct
proportion to use of information & communications technologies (ICT)
and in the cost of ICT related employment.
Critics argue that such taxes
are regressive (ie disproportionately affect the poor), won't work
without total international cooperation, and that the technology for
administration doesn't exist or remains too expensive.
the EU report
While there's disagreement, the first
major proposal for taxing electronic information was by Arthur Cordell
in a 1994 Club of Rome report. It was further developed in a number of
papers by Cordell and Ran Ide in 1995. In Europe, the 1996 HLEG
Policy Report (pdf)
of the High Level Expert Group on the Social Aspects of the Information
Society, chaired by Belgian economist Luc Soete, argued that the growth
of electronic commerce - particularly on a cross-border basis - was
seriously eroding existing tax regimes.
The report called for research into
alternative revenue collection mechanisms, including a tax on every byte
sent over the net. Proponents argued that a tax at a very low level per
byte would be accepted by users yet would replace part of the VAT (GST)
and other revenue lost to ecommerce.
In 1994 a figure of around 1 cent
per megabit was proposed; that was said to be "very low" but
has since been criticised as out of kilter with broadband developments
(eg one Canadian estimate claims for video on demand the tax is
equivalent to 2 cents per second or C$72 per hour and for speech over
C$4 per hour).
The HLEG recommendations were rejected
by the European Commission. The 1998 Ottawa OECD conference on ecommerce
resulted in government
endorsement of arguments in the Electronic
Commerce: Taxation Framework report
that existing
taxation principles should apply to ecommerce (eg no 'byte taxes').
1999 UN Report
In 1999 the Globalization
With A Human Face (Raworth Report) report
commissioned by the United Nations Development Programme included
proposals for a byte tax, along with a wide-ranging review of
intellectual property rights aspects of the World Trade Organization,
such as the TRIPS agreement discussed in our intellectual
property guide.
Revenue would be used by the UN in developing
lower-income areas within nations
such as the US and Australia and in addressing
global development needs.
The
proposal reflected suggestions by leading economist James Tobin for
what's become known as the 'Tobin
Tax', a user fee/gross receipts tax on electronic financial transactions
- with revenue being used to address north-south or other 'divide'
issues.
The report proposed a
tax of the equivalent of one US cent on every 100 emails sent by an
individual. The authors claimed that such a tax would have generated
US$70 billion in 1996, more than total official development assistance
that year, although user costs would be negligible. Given soaring growth
in email, global revenue would now be significantly higher; it is
estimated that in Belgium in 1998 the tax would have yielded $10
billion.
All well and good, but the report conceded that the UN wasn't
in a position to enforce the tax. The report also referred to
proposals for a 'digital tariff' on transmissions, reflecting
disparities in global internet traffic (eg the US is a net exporter) and
ongoing discussion at the World Trade Organization.
In May
1998 the World Trade Organization's (WTO) 132 member states announced
that they "will continue their current practice of not imposing
customs duties on electronic transmissions".
As you would expect,
the report was widely criticised as unviable: administratively
impractical, politically unrealistic.
state of play
The EU has, in effect, officially
backed away from studying a byte tax. The WTO 'Stand-still Agreement'
remains in place.
As noted earlier in this guide, in
the US the federal Advisory
Commission on Electronic Commerce (ACEC)
has been holding hearings on
Internet-related tax proposals. Don't hold your breath for
coherent, practical outcomes. The March 2000 round of
consultations mainly demonstrated disagreement within the federal government, between individual states and within business groups.
Bricks-&-mortar retailers, including the International Council of
Shopping Centers and International Mass Retail Association, have formed
the E-Fairness Coalition,
a lobby group advocating a 'level playing field' at the state and
national levels. The Internet
Tax Fairness Coalition (ITFC)
is another lobby group.
The 1998 Ottawa OECD conference on ecommerce resulted in government
endorsement of the Electronic
Commerce: Taxation Framework report
that argued that existing
taxation principles should apply to ecommerce (eg no 'byte taxes'),
there should be no discriminatory taxation, consistent standards for
cross-border taxation should be developed, consumption taxes should be
imposed at the place of consumption, and digitised products should not
be regarded as goods for consumption tax purposes.
other approaches
There are recurrent proposals from
various sectors for a content or recording tax, variously a levy on
recordable media (blank CDs, Zip disks and floppy disks) or devices
(computers, VCRs).
A model is the the US Audio Home Recording Act
1992, using a tax on DAT recorders and blank DAT media to fund
royalties to authors, performers and publishers.
next page (Australia)
|
