Excerpt from original bit tax proposal. It doesn't specify where the tax is
collected but suggests some alternatives.
=====================
Say the tax is .000001 cents per bit. Collected automatically it will cause
fewer problems than most other direct or indirect taxes. If collected by the
telecom carriers, satellite networks, and cable systems, the revenues would
flow directly to the national revenue service of the respective country.
The bit tax would be applied to all interactive digital transactions.
Interactivity makes the transaction valuable. A conversation, data search,
accessing an ATM, shopping on the net, banking via the net--is an activity
you choose to do because it does something for you. You get something for
doing it, you get something out of doing it-- otherwise you wouldn't be
doing it. It is this new value, this new productivity that is creating so
much new wealth in networks.
The tax would apply to all interactive digital traffic. Digital broadcast
("one-to-many" broadcasts) would be exempt. But broadcasts of one-to-few,
eg., TV broadcast to a few stations for later rebroadcast, or newspaper
transmission by satellite to remote printing plants are interactive (because
they are "addressable") and would be subject to the bit tax.
Research is needed on many aspects of the tax. For example, two pricing
models have been proposed. One is the "letter model." This would operate in
a similar way as today's postal system. Here the digital message would carry
a further piece of information: an electronic franking mark. The electronic
frank would consist of changing one bit in the header of the message. The
metaphor is to today's postage stamp and franking by the local post-office
which indicates the postage has been paid and the letter can be delivered
anywhere in the world. Member countries would have a settlement mechanism,
similar to the Universal Postal Union, to assure that revenues are equitably
distributed.
Another pricing model is based on the turnpike or the toll road. Here the
digital message would be subject to a number of (lower) bit taxes as it
travels through the network. With collection taking place at each node in
the network, countries would keep what they collect. Here there is no need
for an electronic franking mechanism.
Pilot studies are needed on how to impose the tax. User-pay or applied at a
regional level, say, by area code, metro area, province or state? Or some
combination of both? Part of the tax in the customer's base rate and the
rest based on actual use.
Note the implications of including area code or other region as part of the
taxable base. If transactions greatly increase in one region, new network
investments and operations would likely take place in a lower bit tax rate
region.
Research must be done on the burden or incidence. Is it progressive or
regressive? Will it be absorbed by carriers, or passed on to consumers, or
both? Should lower rates apply to very large files such as digital movies
downloaded to the home?
Leased or private lines would be charged a fixed rate depending on the
bit-carrying capacity of the line. Thus a 1-800 number or other leased line
would have a bit tax rate of, say, 70 percent of the carrying capacity. With
no built-in meters in these lines and because the traffic fluctuates, it is
easier to settle on a fixed percentage of capacity.
It is unlikely that any single country could institute a cybertax such as a
bit tax. It is equally unlikely that I can clearly see as of this day in
1998 (!!) when and how a global bit tax would be fully implemented.
Those concerned with global governance, those who have been worrying about
tax erosion will take notice of any suggestion by (countries) to dialogue on
cybertaxes.
And what about the tax rate itself? Is it too high or not high enough? If
.000001 cents per bit yields too much revenue, it can always be adjusted. As
network-based commerce expands, the number of bits increases. During peak
periods in North America 1 trillion bits per second (bps) are transferred on
telephone networks. In the future, with fibre optic networks the capacity
will be expanded to a peta bps. A "1" followed by 18 zeros! The bit tax rate
will have to be adjusted for changing times.
Some oppose the tax, arguing that a tax on this new area of economic
activity risks slowing its introduction. My answer is: did the imposition of
the gasoline tax slow the development of the automobile industry?
Other opponents are those want to decrease the power of the nation state. To
do this they would choke off all its taxing powers. They see the bit tax as
a sort of stealth tax. To this group I can only say that I take a different
view. From my perspective, I offer a quote from US Supreme Court Justice
Oliver Wendell Holmes, Jr., who wrote in a decision in 1904 that "taxes are
what we pay for civilized society."
As more and more commerce takes place on global digital networks it is
important to develop new fiscal tools that are effective in the digital
environment.
One step in global action could be the bit tax. It could supplement the
revenues of nations everywhere. As an additional source of tax revenue it
could have applications locally.
While the economy has gone global, the nation state is the place where
citizens turn for a host of services: from education to medical care to
income support when jobs are lost. The nation state provides the social and
physical infrastructure in which individuals come into the world, are
educated, raise families, find meaningful work, and finally leave the world.
While the role of the nation state is undergoing a re-evaluation--there are
bills to be paid!
How does the nation meet the fiscal challenge in a globalized economy? How
does the nation maintain its tax base in a porous globalized world? How do
the developed countries of today avoid becoming part of the "third-world" of
tomorrow's information-based global economy?
Today I have suggested one way. A cybertax--a bit tax or some variant offers
a way for nations to maintain their tax base.
And it could be, as we peer into a still somewhat murky future, that the bit
tax itself--once implemented--could be but the basic turnover tax on the
information highway. It could be that somewhere out there we will see the
development of a range of bit taxes. Bit tax, bit tax plus and bit tax
plus-plus. Might this be one way that low, medium and high tax jurisdictions
distinguish themselves in the future?
This line of speculation is for another time, for another venue.
-----Original Message-----
From: [email protected]
[mailto:[email protected]] On Behalf Of michael gurstein
Sent: Wednesday, October 10, 2012 11:01 AM
To: 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION'
Subject: Re: [Futurework] FW: Eleven Euro States Back Financial Transaction
Tax
Not very likely...
I follow those telecom/ICT policy discussions and the current hornet's nest
is around the possibility of putting in place mechanisms to allow for sender
pay systems (Google paying something to the folks who are carrying their
billion or so messages a day/hour/minute (?)... which to my mind is a major
problem since 90% of the traffic (and revenue/benefits) go to a relatively
small number of companies/countries while the costs (for providing the
infrastructure) are rather more equitably :) distributed...
Needless to say the reaction is rather as though someone was attempting to
abolish Christmas (which I guess in a sense they are :)
It will not pass--or if it does it will be over the dead bodies of the US,
Google, Amazon, Facebook, Apple and uncle Tom digerati and all.
M
-----Original Message-----
From: [email protected]
[mailto:[email protected]] On Behalf Of Sally Lerner
Sent: Wednesday, October 10, 2012 7:02 AM
To: [email protected]
Subject: [Futurework] FW: Eleven Euro States Back Financial Transaction Tax
Bit tax next...?
________________________________________
From: Portside Moderator [[email protected]]
Sent: Tuesday, October 09, 2012 9:55 PM
To: [email protected]
Subject: Eleven Euro States Back Financial Transaction Tax
Eleven euro states back financial transaction tax
By John O'Donnell and Harry Papachristou
October 9, 2012
Reuters
http://www.reuters.com/assets/print?aid=USBRE8980UC20121009
LUXEMBOURG/ATHENS (Reuters) - Eleven euro zone countries agreed on Tuesday
to press ahead with a disputed tax on financial transactions aimed at making
traders share the cost of fixing a crisis that has rocked the single
currency area.
The initiative, pushed hard by Germany and France but strongly opposed by
Britain, Sweden and other proponents of free markets, gained critical mass
at a European Union finance ministers' meeting in Luxembourg, when more than
the required nine states agreed to use a treaty provision to launch the tax.
Commonly known as a "Tobin tax" after Nobel-prize winning U.S. economist
James Tobin proposed one in 1972 as a way of reducing financial market
volatility, it has become a political symbol of a widespread desire to make
banks, hedge funds and high-frequency traders pay towards a wrenching debt
clean-up.
"This is a small step for 11 countries but a giant leap for Europe,"
Austrian Deputy Finance Minister Andreas Schieder said. "The way is now
clear for a just contribution from the banking and financial sector for
financing the burdens of the crisis."
The deal raised the prospect of a pioneer group of European states for the
first time launching a joint tax without the unanimous backing of the
27-nation bloc, a move that may fragment the Union's single market for
financial services.
To read more, go to
http://www.reuters.com/assets/print?aid=USBRE8980UC20121009
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