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The 'Net as fantasy
island
By Scott Bradner
As usual the press did
not get it quite right. At the end of February some of the press reported that
the President of the U.S. said that the Internet should be a tax-fee zone. If
you take a look at the speech itself (available from http://www.whitehouse.gov) it does not quite say that. In
the speech, given to a San Francisco technology conference, President Clinton
calls for a "moratorium on discriminatory taxation" on the Internet.
In particular he said he supported H.R. 1054 and S. 442, the "Internet Tax
Freedom Act" now being considered by the U.S. House of Representatives and
the Senate. ( The text of the proposed laws are available from
http://thomas.loc.gov.) The bills (the House and Senate versions are the same)
deals with two semi-related issues, taxes and regulations.
The legislation calls
for treating commerce done over the Internet the same as all commerce executed
remotely, for example, by telephone or mail order. This means that just because
you buy a microwave oven through the 'Net you are not protected from whatever taxes
would be imposed if you bought the same microwave oven from a mail order
catalog. It also specifically would outlaw taxes or fees imposed, directly or
indirectly, on interactive computer services or the Internet or on the use of
the Internet or interactive computer services. Finally, it calls on the
President to try and make sure the rest of the world exercises the same
restraint about taxing the Internet.
Somewhat orthogonally,
the legislation also would remove from the FCC or any State regulatory commission
all authority to regulate the prices or subscriber fees charged by interactive
computer services or information services delivered through the Internet except
in the cases where the purchaser is a rural health care provider, a school or a
library. Note that this does not extend to Internet service providers
themselves so, in theory, the FCC could determine what access fee UUNET charged
its customers even if it could not regulate what AOL charged.
This is good stuff but
it falls way short of what some of the press stories implied and what many
Internet fans would like to see--a tax free Internet--an Internet in which you
would not have to pay sales tax for that microwave oven. That just ain't gonna
happen - not with estimates like the President's of more than $300 billion in
electronic commerce by 2002 floating around. But the idea still is very
attractive to many people. They cite the difficulty of dealing with the 30,000
separate authorities with the power to impose taxes in the U.S. alone. It is also
reasonable to note that taxing mail-order sales has been less than universally
successful. But despite these problems there is no way that these taxing
authorities can afford to see their revenues cut as commerce moves to the
Internet.
The misunderstanding of
these proposals does fit right into an all too common view of the Internet as
being on some plane disconnected from the real world, a plane that can avoid
the power of governments. Maybe that is the plane that Tattoo saw at the
beginning of each episode of Fantasy Island.
disclaimer: Harvard does
not have a clinical psychology program so this study of fantasy is my own.