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Cybertax

Luc Soete and Bas ter Weel

No 17, Research Memorandum from Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT)

Abstract: Internet, the fastest growing communications medium or consumer electronic technology, doubles its size every six months. Within a few years the number of citizens in Cyberspace will outnumber all but the largest nations. The borderless world of the Internet extends its reach to all corners of the world. Best of all, it is almost free. Hardware costs aside, once on the Internet a user can surf anywhere for the price of a local phone call. But what about all the foregone tax revenue that electronic commerce could facilitate? Although Internet commerce is in its earliest stages, its rapid growth is anticipated. Some estimate that in thirty years time, consumer activity online could represent more than thirty percent of total consumer activity. This leads to the erosion of national tax bases. In this paper we show that as a measure of last resort the bit tax can be implemented. Although the exact implementation of such a tax is not yet clear, the general idea of a tax on information from the point of view of an eroding tax base and the changing society is certainly worth considering. Furthermore, the tax revenues could be directed towards improving access to the Internet, educating individuals to become acquainted with the Internet and providing additional needed bandwidth.

Keywords: economics of technology (search for similar items in EconPapers)
Date: 1998
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