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China Faces The E-Commerce Tax Debate
Despite a recent interview published in China Daily in which top tax official Jin Renqing asserted that Internet e-commerce should not be exempted from taxes, there are no immediate plans to impose Internet taxes, according to international industry watchers.
"A lot of these statements are just trial balloons," explained John Foarde, vice president of the U.S.-China Business council. Chinese officials toss out ideas "before they go in an official direction."
Jin told the newspaper in an interview Sunday that "the electronic form of e-commerce does not change its nature of trade." He suggested China would not exempt burgeoning electronic commerce. Though China's online trading is still developing, Jin said in the interview that China "cannot boost its growth by allowing a tax exemptions" for e-commerce.
Chinese tax revenues are up nearly 20 percent, and the country's gross domestic product rose more than 8 percent in the first half of 2000. But growing deficits from failing state-owned enterprises, rising social security costs for laid off workers and increased political pressure to lower tax burdens are factors demanding increased tax revenue.
Foarde indicated that with upcoming leadership meetings, e-commerce issues including taxation may be discussed by lower level officials. According to Jin, the State Administration for Tax has set up a task force to examine taxation issues on e-commerce, like tax evasion in cyberspace.
Though he says nothing is in the forefront in China presently to allay an e-commerce tax, Foarde noted that it would be much easier to instigate Internet taxation in China simply because the industry is still in its infancy.
"It's hard to say [what the impact of Internet taxation] without seeing what the specific proposal would be. A modest levy [on] e-commerce may not be too onerous — and may not have a huge effect on the growth of the industry, " Foarde said.
Information Technology Association of America President Harris Miller noted that for developing countries, traditional means of taxation would hamper technology growth and overall economic development. "It would be a mistake at the end of the day if the states and governments approach this as traditional tax collection which have a high tax rate and take a lot of money off the top…That is a disincentive to creating economic activity. The real way to make money is as much economic activity as possible."
Global Public Private Partnership Emerges From G-8 summit
In a major effort to promote the growth and spread of information technology, major non government organizations and private companies have combined efforts to launch the Global Network readiness and Resource Initiative, started as part of the global IT charter adopted during the G-8 summit this past weekend.
Under the partnership, groups — including the Markle Foundation, IBM, Harvard University, the United Nations Development Program, U.N. Foundation and World Economic Forum — will develop specific assessments and strategies for individual countries and their efforts to educate and bridge the digital divide. Additionally, the Global Network Readiness Initiative will offer free consulting services to developing countries — both government and private sector — to build a proactive policy infrastructure to support the growth of e-commerce and IT.
Streaming Video Still Viable in Australia, For Now
Amid heated debate over the future of online video streaming in Australia, Minister for Communications, Information Technology and the Arts, Sen. Richard Alston announced Friday that such a service would not be considered a broadcast service and therefore not subject to a regulatory requirement broadcasting license, which will not be available for businesses until 2007.
With a proposed amendment to the Broadcasting Services Act under the auspices of digital television legislation, Australian parliament conducted a review of the definition streaming video. In a statement last Friday, Alston said decision applies to all Internet video and audio streaming. But the Government will now consider whether any further action is necessary to give effect to this position and to clarify any legal uncertainties under the Act."
Critics, particularly Australia Internet Industry Association (IIA), applauded the announcement, but made clear its disapproval of more regulation restrictions. During a conference Monday in Australia, IIA Executive Director Peter Coroneos said "until that [decision] translates into law, I don't really think we can relax."
Coreones argued that the issue at stake was not simply the fate of streaming video, but more broadly the issue of government intervention. " This is not an industry that can be regulated by the traditional legal paradigms," he said. This is "about decision makers who believe that every time they find something on the internet that doesn't accord with their own values, or every time they find something in the Internet that threatens the established interests, they believe they can pass a law."
Indian Minister Says No To Opening Net Telephony
Despite a Planning Commission recommendation earlier this month, India's communications minister, Ram Vilas Paswan, stated that the government may not allow Internet service providers to offer Net telephony after all, fearing loss of revenue to the state-controlled telephony service, "Though a lot of privatization is on the cards, there are no plans to allow ISPs provide voice over the Internet," Paswan declared during a Communications Ministry meeting last week. Voice over Internet Protocol currently is banned in the country. Paswan's main objective will be wiring all villages in southern Indian states with telephony by March 2001.
- by Maureen Sirhal
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