TAX IS COMING
OCTOBER 1999
By Gareth Powell
The equation is a simple one. The governments of the world are losing serious amounts of taxes because of the Internet. One estimate has it that the British government will lose $US10 billion this year alone.
Up with which no government can put.
Therefore, QED, there will be Web taxes. The question is not whether transactions on the Internet will be taxed. Rather, it is when and by how much.
In the United States, Congress has warned an Internet tax commission that it is against more taxes on electronic commerce, including sales taxes on purchases across state borders. Three dozen members of Congress wrote to the Advisory Commission on Electronic Commerce:
This idea is not a popular one in Congress or among the American people.
Off the top of my head I cannot think of any tax that has been over-popular so this unpopularity comes as no surprise. The letter went on to say it was troubled by indications that the panel was examining ‘how to tax the Internet, rather than whether to tax the Internet’. It urged the panel to think of how ‘complex and excessive state and local taxes on e-commerce’ might affect the American business world at home and abroad.
It went on to say:
You should also know that there are many members that will oppose any new taxes on the Internet. An academic exercise on new ways to tax the Internet is not productive and does not reflect the intent of Congress in establishing the commission.
This is, of course, a load of old nonsense.
If governments – local, state or federal – have their income whittled away by business going to the Internet then money must come from somewhere.
For example, there has to be a way to finance over-paid, over-staffed and over-cosseted members of Congress or they might have to lose some of their perks – and that would never do.
Also, there is the odd question of schools, roads, fire protection and law enforcement. It is surely not being seriously suggested that, for example, school funding should be cut so that Amazon.com can make a lot more money.
Larry Naake, executive director of the National Association of Counties, put it very well. He said:
If state and local governments lose billions, be assured county governments will have to increase property taxes or income taxes to make up the difference – or cut essential community services.
And that is it in a nutshell.
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