RealTime IT News

PowerPacket: Anyone for Tax on Internet Commerce?

Nothing puts fear and loathing in Las Vegas or Wall Street like the mention of tax. The stocks of Internet commerce companies especially, including Amazon.com, Onsale, Egghead.com, CDnow and N2K are vulnerable to possible backlash if the U.S. or any other government starts applying taxation to transactions.

Meanwhile, Internet service providers could be hurting if a usage tax gets applied to them as the huge telephone giants beg their Washington contacts to levy the old-world tariffs in the monopoly-free environment of the World Wide Web.

In this special Internet Stock Report we gathered some of our notable readers together and asked:

"Should governments tax Internet commerce?"


"Governments can tax whatever they want, but if they tax Internet commerce they will lose out. Looking ahead, I don't know exactly how we make the transition, but I believe that in the long run we will probably end up taxing real estate since that's the main thing that can't move from one physical jurisdiction to another.

Now if you mean *Net* governments, they probably *will* tax Net
commerce - with "taxes" otherwise known as transaction fees, commissions, memberships, subscriptions . . .

FWIW, still looking ahead: The element of choice is key, and I want to make sure that my browser vendor, for example, does not tax me, directly or indirectly, especially if I have no choice of browser.

- Esther Dyson, Internet & PC luminary

"What I am certain about is that I do think they will want to!

Assuming e-commerce grows to projections, U.S. state governments will push for this at the very least to gain some additional "revenue sharing" with the U.S. federal government.

On the broader scale of the world, national governments will probably be forced to apply taxation merely at the corporate level and not at the
transactional level. There will be too much technology change and loopholes to plug to properly determine, tax, and deposit e-commerce transactions.

I believe that governments should not tax e-commerce transactions as it will drastically affect their nation's ability to move into the "new economy."

-George Zachary, venture capitalist, Mohr Davidow Ventures

"I do believe that governments should tax Internet commerce, just as
they should any other commerce. The question for me is should they
tax at the point of origin or destination?

The implications are profound in the marketshare to be gained or lost by organizations moving offshore to do business, an inevitability in the Internet. Instant wealth will be created in countries that have the lowest tax rate. At the same time, one would not expect the same level of government protection from fraud in highly unregulated environments.

Confidence is key to making commerce happen, so we should strive to set some boundaries and taxes should help to pay for this (in a perfect world). Bottom line, I'm choking as I say that governments should tax commerce (not to support the billion dollar screwdriver business, but legitimate commercial transactions).

-David Takata, stock analyst, Gruntal & Co. Investment Bank


Steve Harmon's PowerPacket is brought to you by Mecklermedia's InternetNews.com & is a special edition of Internet Stock Report. If your business is the Web, Internet Stock Report is a must read. Spread the word and join thousands of other readers including Microsoft's Bill Gates, Yahoo's Jerry Yang, Hummer Winblad's Ann Winblad, AOL's Ted Leonsis and more!