[Chapter-delegates] Internet Governance - the issue of Taxation Online and World Money

[Sivasubramanian Muthusamy]

Hello All,

Posted here for comments :


The complexities surrounding taxation for online transactions opens up an
interesting possibility to further the International System.

Online transactions could be broadly classified as Intra-national and
Inter-national Online Transactions These terms are peculiar as apparently
"intra national" and "International" do not quite fit in on the Internet.

However there could be a way of way of determining if a transaction takes
place online is "intra-national". A resident of US purchasing a room night
in a hotel within US, a Consumer in US residing in US ordering a product
that is physically stored as made-in or Valued-Added-in US product within US
boundaries and physically delivered without a need for custom clearance, an
American or a traveling immigrant purchasing an air ticket for travel within
US in a domestic airline etc can all be classified as Intra-national. These
"intra-national" transactions could be considered e-commerce taxable in
America, if the US Government chooses to, in some form.

A transaction by an American national that requires a physical delivery of
goods and services that does not fit in the 'Made-in or Valued-added-in the
US' category whether or not stored abroad (Today's Logistics companies make
it possible to store foreign products for convenience of delivery in a
different country) and cross -national Service purchases online, for e.g. an
European ordering a hotel room in the US or an Indian national ordering
online a computer - a brand owned by an American company, manufactured in
Taiwan, shipped out of Taiwan with a software installation en-route in
Singapore, delivered in India - all these can be considered International
Online transactions.

International Online transaction Taxation issues pave way for an opportunity
to the Nations of the World for Universal thinking. This is an opportunity
to introduce a form of "International transaction taxation" that could go to
the International Treasury to fund the creation and maintenance of Internet
Infrastructure, to fund the revenue expenditure of Internet Administration
including e-commerce regulation and administration and perhaps to fund
global projects such as programs for Climate Research, Space missions, Ocean
related programs.

We do not have a mechanism for International Revenue. If truly measured the
volume of all International Online transactions is already in the order of
trillions and even a 1 or 2% non-duplicating transaction taxation would
bring in tens of billions for International Development from a truly
International source. Apart from Taxes there would be other revenue
possibilites, but that is off-context.

This universal thinking would offer a quick and easy solution to the
complexities of Online Taxation as it makes the issue of which nation has a
right to tax a certain online transaction irrelevant.. Besides it creates a
source for revenues to an International Treasury which does not exist on
date in its true sense.

Such thinking could also pave way for creation of a World Currency (as
e-currency?) as an exercise akin to the creation of the Euro on a global
proportion.

( This is an Internet Governance issue that may not be one of the policy
issues that ISOC is helping to resolve at the moment.  I wrote this a short
while ago as required annotation on a course material for a Diplo Foundation
course on Internet Governance and it occurred me to moot this as a topic for
discussion by the Chapter delegates )

-- Sivasubramanian Muthusamy
ISOC India Chennai
http://isocmadras.blogspot.com
http://www.linkedin.com/in/sivasubramanianmuthusamy
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