Re: MULTI-JURISDICTIONAL TAXATION OF ELECTRONIC COMMERCE

[Sean Roach <roach_s@alph.swosu.edu>]

At 03:16 PM 2/21/97 -0500, Robert Hettinga wrote:
>--- begin forwarded text
...
>This symposium will consider a wide range of issues, including:
>
>**Differences in determining the electronic commerce income
>tax base.  Should source or residence rules be used, or should
>some form of formulary apportionment be applied?
>
>**Problems in imposing retail sales taxes on electronic sales.
>Should traditional nexus rules apply?
>
>**Problems in determining the value added by electronic
>commercial inputs.  Should a tax be determined based on the
>'bits' of information? If so, should each 'bit' be valued the
>same?
>
>**Problems involving the harmonization of tax rules.
>International and sub-national aspects of this problem will be
>considered. OECD efforts in this area will be contrasted with
>proposed uniform state legislation in the US.
>
>**Throughout the symposium the impact that these tax decisions
>will have on cross-border investment decisions will be a primary
>concern.
...
"Toll" tax.
If each packet were "taxed" as it entered a system, and due to the nature of
the internet, when traffic increases in certain areas, prices would go up,
driving activity back down, then each area could "tax" what it wanted.
The only real problem would be how to get people to pay.  Unlike the toll
booth at the entrance to a turnpike, internet users don't keep exact change.
There is no window to roll down to hand the attendant the money, there is no
accepted currency to hand the attendant either.
Taxation can't really begin until e-cash equipped browsers are common.
Plus, executables are fairly large, while text files tend to be small,
adding a bias against executables, images, and audio files.
In addition, since the packets have to originate from somewhere, the
location of the poster would get to tax at least.

Of course, if such a system were not mandatory in a region, then "freenets"
would get a whole new meaning.