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The Internet - Taxation - the backdoor to censorship

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Have we forgotten something?

There are items on the net re copyright, privacy, formatting and net publishing technicalities. For professional publishers, editors and journalists these are probably the main concerns. Most journalists regard news media as the prime weapon in guarding free speech and democracy (or whatever 'ocracy makes them feel like the 'knight on a white charger'). There are articles on net publishing by women, the disabled and other minority groups. There are arguments for and against freedom of access for other minority groups, in this context like many editors I feel censorship of the media is the start of a slippery downhill slope and is tantamount to shooting the messenger without doing anything about the original problems.

We have forgotten something! - money and taxes!

However we think of ourselves: competent hacks, the fourth estate, the gutter press, the yellow press, the quality press - we like to eat - for that we need money. The rapid development of the Internet looks set to deal a hefty blow to traditional paper based publishing. Most papers and magazines hope to make money, through cover prices, advertising revenue or a combination of both. With so many sites on the net any publication charging to see its site (cover price) would find itself sadly short of visitors. The corporate accountants (those non newspaper people who mostly run newspapers nowadays) are going to realize the present practice by many publications of offering advertisers FREE space on the on-line publication if space is taken in the paper is giving away a 'product' which accountants feel should be charged.

In the rush to return to our favourite occupation, money making, have we forgotten to ask an important question - who gets the taxes - WHY?

Some traditional publications with web sites, advertising companies and other sites already charge for Internet advertising and design -
- Do their invoices include any sales or value added tax?
- If a tax is included is it legal to do so?

In many countries taxes (sales or value added tax) are added to the cost of the publication at point of sale, or to the cost of advertising, sometimes both. Does this apply to Internet publishing? Which country is entitled to the tax? The country from where the advertisement is sold, the country where the buyer is based, the country(s) where it is available to the consumers (net viewers)? I have spoken to several UK national newspapers with web sites, none has yet thought to ask these questions! !

Is it legal for a company to charge sales or value added tax on Internet advertising?
- In Britain if a company or individual is registered for VAT (value added tax) any service or product sold by that company or individual is subject to the addition and collection of VAT?
But is it?
Printers, registered for VAT if turnover warrants: many of their products are not 'vatable sales'. E.g: the print costs for a brochure or leaflet is not 'vatable' unless more than one third of the space is used as an order form; a magazine might contain almost all advertising, but again print costs are not vatable.
Export sales too can be exempt depending on country of destination.
These examples provide a cogent argument for most if not all Internet services to be exempt of sales or value added tax - the nature of the Internet means that the product will be seen outside of the country of origin (exporting). Most sites whether advertising or offering information do not have more than one third of their space taken up by order forms (UK print exemption).

Some accountants might see this as a pointless question as in many countries VAT received can be balanced against VAT paid and reduce a company's tax liability. However, publishing professionals, editors and journalists should ask if this accountants' practice will allow governments a 'back door' approach to claim quasi jurisdiction over the Internet, and establish the (any) government's right to impose censorship?

Has the American Court decision that it is unconstitutional for the US Government to censor the Internet created a precedent for establishing the acknowledged globalization of the Internet? In view of that precedent, is it legal for any government to enforce sales or value added tax on Internet services where the product (the advertisement or site) is on-line? Some US states are already exempting Internet services and advertising from sales tax - because they don't want to kill the goose that might lay the golden egg! I dislike the motives, but applaud the result.

Perhaps one reason this question has not yet been addressed is that for the first time publishing for mass consumption has become available to many people who, prior to the Internet, were limited to the 'Letters' page of newspapers. We 'patronizing professionals' have seen it our duty to coach, tutor or otherwise inform the 'amateurs' of the rules of engagement regarding copyright, techniques and other trade secrets from our lofty status as 'professional'. In this unseemly rush to display our greater knowledge are we in danger of putting ourselves and the amateurs at risk of the possibility of censorship which has been anathema to so many in publishing?

Without being dramatic, there have been too many in our profession* who have, over the years and in all corners of the world, given their lives to preserve the right to publish without censorship, it would be a betrayal to throw those lives away in our haste to take on board this new technology.

*See the page of The Committee to Protect Journalists for more information on journalists at risk TODAY.

Member, Association of Internet Professional

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