Keywords

Abstract

Collecting taxes on digital exchanges is a challenge for taxation regimes everywhere.  Tracking and taxing many intangibles, particularly digital goods, would require unprecedented levels of  global cooperation.  As the information economy gathers energy, many sources of income become themselves intangible.  Consultants, creators of intellectual property of various kinds, even subcontractors for physical services can obscure their financial tracks.  The technology and software to do this are now available via the Web and accessible via the desktop.

This paper outlines the issues governments face in collecting tax from digital exchanges, and how new tax avoidance mechanisms might work using a simple Web interface.  It also discusses some ways governments are trying to deal with these issues.  In the worst case scenario, all but the information poorest would be able to abscond from their legal taxation liabilities.

Taxation in a globalised economy forces us to think hard about what global governance might mean.  Cultural norms and expectations entwine with technical and legal underpinnings to determine social and economic outcomes of the globalised information economy.  In this sphere, electronic democracy becomes the flip side of the electronic commerce coin, but makes use of the same techniques.  As with the provision of government services, the Web could have an important role to play in both clarifying the problems, seeking input for solutions, and monitoring the outcomes.  A deeper and more mature commitment to the provision of common goods and safe services might prove a stronger carrot than the taxman’s stick.