Aussies discover regulatory arbitrage...

amp at amp at
Fri Aug 29 07:37:51 PDT 1997

>    ATO urges no Internet slug
>           _By Hans van Leeuwen_
>    The Australian Tax Office's attempt to tax electronic commerce should
>    include no new taxes and as little extra red tape as possible,
>    according to the recommendations of a major ATO report to be released
>    today.
>    "As the Internet allows electronic payment system providers to locate
>    their operations anywhere in the world, they might choose to flee a
>    jurisdiction that unilaterally introduces a strong regulatory regime .
>    . . Unilateral action may be more damaging than no action," the report
>    said.



>    "There are not too many existing taxes worldwide that are not
>    vulnerable," the Tax Commissioner, Mr Michael Carmody, said yesterday.
>    The recommendations to strengthen the tax policing of the Internet
>    included:
>      * Numbers displayed on websites.
>      * Licence commercial internet sites ("webshops") and webshop hosts.
>      * Introduce denomination limits for electronic cash, like those
>        already existing for physical cash.
>      * Review the current wholesale sales tax categories, given that new
>        products were being thrown up by the process of digitisation.

They don't seem to realize yet that it is about as easy to run a website 
hosted 5000K away as one down the street. This is fundamental. Some 
countries =will= attempt to regulate this commerce. I would be absolutely 
amazed if this were not so. The wonderful thing about this though is that 
it is just too damn easy to move a web site offshore to a location more 
friendly to commerce, so they will ultimately fail. The bad part about this 
is that there are few, if any restraining forces on government action in 
most places. Therefore, it is likely that any attempts to regulate internet 
commerce will be enforced for far longer than any person with a brain would 
continue to do to. Additionally, many companies will cave to the demands of 
whatever the jack-booted thugs demand so as to avoid harassment. 

>    But Mr Carmody ruled out introducing any taxes on data flows, such as
>    a bit tax, in the short term.

The last 4 words here are what is important. Why they think things will get 
better for them is beyond me. The ability to route around damage (in this 
case, taxes) is the strong point of the net. With any luck, this will 
continue to be true.
>    "We don't see major advantages to that at the moment. For Australia to
>    jump immediately to a bit tax would just drive Australian business out
>    of the country," he said.
Again, DUH.

>    The report said electronic commerce threw up some tough challenges to
>    tax administrations, including the difficulty in identifying the
>    parties to an electronic transaction, the ability of cyber- businesses
>    to store records offshore and encrypt them, and the removal of "middle
>    men" -- such as wholesalers and brokers -- from the distribution
>    process, who usually make the ATO's tracking of transactions easier.
>    But Mr Carmody said the ATO would not be assuming that the reason
>    businesses went online was to avoid tax.

>    "It's just another medium of transacting business, which does not of
>    itself say they're not going to meet their tax obligations," he said.
>    "But there are concerns that the Internet opens up wider fields for
>    those who are seeking to avoid their liabilities."

Don't you just love the way they try to make confiscatory taxes seem like 
the most natural and patriotic thing in the universe? <:) 

Name: amp
E-mail: amp at
Date: 08/29/97
Time: 08:59:25
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