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Net Taxes Are an Even Messier Issue Abroad Borderless commerce raises thorny questions in countries that really rely on sales and consumption taxes If you think the war over taxing online commerce is hot in the U.S., look at what's happening in the rest of the world. Around the globe, the stakes are higher, the targets of opportunities greater, and the politicians even nosier. Most nations understand that -- sooner or later -- they're going to have to come up with a uniform system of taxing and regulating borderless e-commerce. But getting there will be a daunting task. Just look at the cost of Internet access in other countries. For all of the complaining in the U.S. about how taxes and other regulatory costs threaten to stifle the Web, it turns out that logging on here is far cheaper than anywhere else in the world. According to a new study by the Organization for Economic Cooperation & Development (OECD), 40 hours of Internet access in the U.S., at peak rates, costs $37.30. That's half of Germany's $76.78, and just a third of the $105 it costs in Britain. And access is just the beginning. The OECD, The World Trade Organization (WTO), and the European Union (EU), are all struggling to find uniform standards for protecting privacy and free speech, and an international tax regime. Even while Seattle cops in their spiffy Darth Vadar suits were slugging it out with latte-slurping anarchists on the streets of Seattle, the WTO took some initial steps toward tackling the issue of cross-border tariffs on e-commerce. BALANCING ACT. In the U.S., President Clinton and the GOP Congress want to exempt international Internet sales from any tariffs. But the rest of the world has a much more difficult balancing act. On one hand, consumers will want the unprecedented access to goods and services that the Web makes possible. On the other, local businesses will demand protection from the (overwhelmingly American) e-tailers that dominate the market. Besides, all that tax revenue is so tempting. Then, there's the debate over whether local consumption taxes should be imposed on Net sales. It's a nasty battle here, but it's even rougher overseas. Sales and other consumption taxes represent only about 15% of all tax revenues in the U.S. And almost none of it goes to the federal government -- one reason why it's so easy for Washington lawmakers to demand that the Net be tax-free. Not so in much of the rest of the world. In Europe, value-added taxes and other consumption levies average more than 30% of total tax revenues. Exempting e-commerce from the VAT would blow a massive revenue hole in the budgets of nations such as Britain and Germany. It's going to take years for all this to be sorted out. The challenge will be for nations to maintain the integrity of their tax and regulatory systems while trying to accommodate a form of commerce that knows no borders. Gleckman, senior correspondent in BW's Washington bureau, offers his views on Mondays for BW Online EDITED BY DOUGLAS HARBRECHT _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
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