At the 7 February launch of the Deutsche Telekom TeleLearning service, Dr Martin Bangemann said that there was "no likelihood" of the Bit Tax being taken up by the European Commission.
The Bit Tax is a proposal which seems to have originated in a Club of Rome report in 1994. It has been brought into prominence recently by Luc Soete, a professor at the University of Maastricht and Chairman of the High Level Expert Group, in a cogent paper written in 1996 and made available on the Internet. See the url for the text of this: http://www.ispo.cec.be/hleg/bittax.html.
In a nutshell, the idea of the Bit Tax is to levy a tax on every byte transmitted through the Internet. The tax would be at a very low level per byte, but could bring in enough money to replace part of the VAT and other tax revenue allegedly lost as Internet-based trading replaces physical trading. A figure of around 1 cent per megabit was proposed in 1994 - this was said to be "very low".
Well, it might have been low in the narrowband era - however, in an era of Video on Demand over a 2 megabit/s circuit, this is equivalent to 2 cents per second, or $72 per hour! Even for speech it is over $4 per hour - extra.
Proponents of the Bit Tax say that money raised by the Bit Tax could be used for various socially worthy objectives, such as Distance Education. It is believed that Commissioner Mme. Edith Cresson is of this view.
Opponents of the Bit Tax question every aspect of it:
Is any tax actually lost as trading moves to the Internet?
Is it technically possible or cost-effective to monitor Internet traffic so as to calculate the tax? (The Internet at present is not monitored for traffic levels.)
Is there not a Bit Tax already since people pay VAT on phone bills and on Internet access charges?
Would any money raised just be put into general government coffers? (Just like Car Tax is in the UK.)
Dr Martin Bangemann was speaking at the launch of Deutsche Telekoms "Global Learning" service of Online Learning - for schools, universities and industry. After an authoritative presentation on the topic, Dr Bangemann asked for questions.
When questioned on the Bit Tax, he was uncompromising. He admitted that "certain of his colleagues" were in favour of it. (No names were mentioned.) He pointed out that it was European Commission tradition that revenues raised, such as the percentage of VAT that was remitted to the Commission, went into general funds and were not earmarked, therefore the Bit Tax receipts could not be earmarked, even for worthy social activities such as online or multimedia-based education. He concluded by saying that it was unlikely to be taken up by the Commission.
Dr Bangemann finds himself thus in agreement with the UK government. It is said that the UK Customs and Excise department find the Bit Tax "an intriguing idea". However, it is also reported that Ian Taylor, the relevant UK Government minister, says that he is "not looking for such a tax".