From: Steven Clift (clift@publicus.net)
Date: Mon 16 Jun 2003 - 21:48:53 EEST
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Are Congressional proposals to ban U.S. states from levying sales
taxes on Internet access a declaration against public interest
activity of the Internet?
Comments below ...
Here is an article from Wired:
http://www.wired.com/news/business/0,1367,59248,00.html
Pols: Ban Net-Access Tax Forever
By Joanna Glasner
02:00 AM Jun. 14, 2003 PT
If a coalition of congressmen has its way, the government's temporary
moratorium on Internet-access taxes could soon become permanent.
This week, a House of Representatives committee is expected to
consider a proposal that would bar states from imposing levies on
Internet service, but would not affect their ability to collect sales
taxes.
The Internet Tax Nondiscrimination Act, introduced by Rep.
Christopher Cox (R-Calif.), would make permanent a moratorium the
congressman initially introduced in 1998. The current ban is set to
expire in November.
Cox urged support for the measure, backed by more than 30 other
representatives, partly on the grounds that taxes would make it
harder for lower-income Americans to afford Internet service.
... end clip ...
Yeah, right. According the the Pew Internet and American Life
Project, the _total_ uptake of Internet use has pretty much frozen
since 2001 <http://www.pewinternet.org/reports/toc.asp?Report=88>.
There are many other factors keeping low income people off the
Internet than small Internet access taxes. Let's look at profit-
maximizing, monopoly pricing of "always on" and unshareable broadband
connections for one.
I live in a state (Minnesota) which does not have a sales tax on
clothing and most food items in our grocery stores. This is based on
the idea that these items are a necessity. This tax policy choice
was made by my state, my local democracy. However, we do have state
and sometimes city sales taxes/fees on top of federal taxes on many
utilities including telecommunications.
While many argue against dedicating revenues (like we do with the
gas tax for roads and transit) from specific taxes to specific
spending needs, this is exactly what is required to support long-term
public interest activity _of_ the Internet. There is a huge empty
content and interaction void between what the commercial Internet,
the non-profit Internet, and the government Internet currently
provide. I have some diagrams of my "Public Internet" concept online
<http://publicus.net/pi/>.
(As a side point, it is important to note that even with the early
18th century UK postal system, people's willingness to pay for inter-
personal communication was used to subsidize the national
distribution of newspapers which was viewed to be in the public
interest. See Andrew Odlyzko's "Internet pricing and the history of
communications"
<http://www.dtc.umn.edu/~odlyzko/doc/history.communications1b.pdf>
and "Internet pricing in light of the history of communication"
<http://www.dtc.umn.edu/~odlyzko/doc/history.communications0.pdf>.)
At some point in the near future, each country (and their state and
local governments) will need to figure out what essential and desired
online content and interaction "public interest/benefit" services
should exist online - that are not commercially viable/reliable and
are not being provided by existing non-profits and governments. Just
as diverse models for quality public broadcasting emerged with radio
and television, something similar will be a _choice_ for societies
around the world. What do we want online? How should we pay for it?
Should we transfer government funds (i.e. income taxes) from
traditional public service needs to address public interest "market
failures" of the new medium? (Doubtful, therefore if we cut off the
ability of the Internet to raise public revenues we also cut off the
political basis for at least a portion of those funds use for online
related activities.)
If governments get a modest Internet-related revenue system in place,
some of the "Public Internet" void can be filled through funding
existing non-profit, government, even commercial efforts. However, I
would argue that filling most of the void will require the creation
of new organizations that work in partnership will all these sectors,
but can play a convening, more neutral value-added role.
Right now, the rich content and community _potential_ of the online
medium is being lost due to the lack of sustainable and modestly
funded structures that allow efforts to passed from one group of
dedicated and public spirited individuals to the next generation of
those willing the build public space online. Individuals can
continue to build great things online, but the vast majority of
individual efforts and even institutional, but internal individual
champion-led efforts, have died over time. The Internet: 40 million
channels and everything from 1998 is still on. What about 2003, 2005
or 2010?
Banning Internet access sales taxes across all U.S. states is top-
down federal regulation of the Internet. It fundamentally threatens
the ability of my state or local government to raise revenues
proportionate to the strength, growth, and public interest gaps
directly related to this new medium. (Not that an effort to do this
currently exists in any state.) It also cuts states off from
legitimate revenues that can be used to police Internet-rated crimes,
assist state-level spam prevention and legal accountability efforts,
and support various connectivity and IT training programs that seek
to cross the digital divide. (With this limited list of public
problems created by the Internet, it is clear to me that today the
rest of us through income and traditional sales taxes are subsidizing
efforts to the combat the problems created by the online
industry/era.)
Forms of Internet taxation must be available in order to fund efforts
which build parts of this medium in the public interest - while also
furthering the goals of commerce and freedom online. It is time to
stop giving so called Internet-industries special economic rights in
society. It is time to formally adopt the public interest goals that
have been expressed since the Internet's mass expansion, but not
delivered as promised by those who gained initial tax free
exemptions.
In short, the public interest Internet has a short shelf life if
based completely on volunteers or limited to narrow interests of
existing private and public institutions who are "on" the Internet
but not "of" this new medium. Except for the Digital Promise
<http://www.digitalpromise.org/> initiative to support online
education through the creation of federal trust fund, I have seen
very very little serious post-dotcom meltdown political activity (not
counting some limited academic analysis) to ensure a wider and
relevant future for public interest content and community online. (I
am talking about mainstream efforts and not about ideologically
driven "alternative" efforts which are more about advocacy than
general public interest such as Indymedia.)
One would have thought that once it was no longer possible to delude
ourselves that we could make a million dollars a week providing
public benefits online for free, that we'd get back to the hard
public-spirited work of making this medium fulfill its reasonable
potential. If not now. When?
Steven Clift
http://www.publicus.net
Democracies Online
http://www.e-democracy.org/do
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