[Date Prev] | [Thread Prev] | [Thread Next] | [Date Next] -- [Date Index] | [Thread Index] | [ietf-trade Home]
Subject: RE: OTP, OECD and tax collection
This thread seems to be one of the best reasons to re-iterate something
that has been discussed a few times before. This time, I'm going to do
the extreme version, to put it in perspective.
The core of OTP doesn't care about software. OTP is a *protocol*. We
have carefully stayed largely out of the area of 'specifying software'
so that there is opportunity for choice in human interfaces, choice in
software architectures, and a chance for vendor differentiation. There
has been some discussion about APIs, but those too have stayed out of
the human interface area.
Based on your suggestion below, I think all my software would have
carry a warning that "use of the software with the options you have
identified could result in certain legal consequences". Some of these
are rather negative consequences - even my 5 year old PDA could result
in me being subject to defamation charges depending on how I use it.
Come to think of it, my pencil should come with the same warning...
As far as the further discussion below, I think the extraterritorial
discussion is a red herring. As far as 'my' country is concerned, I am
free to buy and sell foreign currencies, and to purchase goods and
services anywhere in the world.
Now, if I want to bring these into 'my' country, then the government
may insist that I stop at the border, and ensure them that there is a
level playing field as regards taxation - that is, I would have to pay
tax X if I bought that good inside the country, so if I bring the good
in from outside, I still owe the tax X.
If I don't like this, I just leave it outside the country.
The proposals I have seen simply allow the merchant/delivery agent to
guarantee that goods to be shipped to 'my' country have already paid
taxes as per the above discussion, and may move expeditiously to the
purchaser's location, not subject to many of the usual stops and
inspections which are necessary without a co-operative tax
infrastructure.
This state exists today between Canada and the U.S.; large U.S.
mail-order merchants are interested in remitting the G.S.T (Good and
Services Tax) directly to the Canadian government, because then their
goods, once ordered, can be shipped directly and quickly to consumers.
This benefits their Canadian customers, and the merchant sells more
goods. If OTP can help to simplify implementation of such a system for
online merchants, then many more companies see these benefits. The U.S.
government will insist on some rigor around the process, but likely
views not collecting sales taxes for goods bound out-of-country as a
good thing, because U.S. merchants are then competitive abroad.
Viewed from this point, I would suggest that it is essential that such
an infrastructure develop if international e-commerce is to succeed. If
a merchant or manufacturer can make a significant and legitimate claim
that their local interests (and those of their customers and employees)
are being damaged by international e-commerce, then many local
governments would move to take action. Since such moves are designed to
protect local companies (and their employees) they would likely receive
strong support where it matters - in votes. They are not likely going
to be swayed by the idea that all consumers can benefit if they will
just switch from real-world to e-commerce.
What might they do?
* insist that payment handlers charge a tax on purchases; for EXAMPLE,
banks might be told that credit card company ZZZ (to continue
operating in country X) must apply a tax to purchases outside of X
when the card was not present for the transaction.
* move to mandatory licensing of service providers; let's be clear
here, I can't imagine anyone *liking* this idea, but if you threaten a
country's economic base, you'd be amazed what they will try. Some have
even been known to use warfare in the past...
* change consumption taxes to income taxes; if they can't get it going
from you, they'll get it coming to you. (There are even good reasons
to think that this might be a positive step, not a negative one.)
Many of us probably share the view that the above are not pleasant
options to consider. (Even members of governments may share that
view.) As a result, there is some incentive to look at a co-operative
tax infrastructure between countries. If the U.S. and Canada can agree
in this manner, then trade between them is subject to less friction
(friction which costs $), and the continent starts to be more
efficient. If the EEC wants to join the infrastructure and share in
the reduced friction, fine. If it doesn't, then fine. It will have to
continue to stop goods at the border and inspect them in accordance
with its trade priorities.
______________________________ Reply Separator
_________________________________
Subject: Re: OTP, OECD and tax collection
Author: "John Messing" [SMTP:jmessing@law-on-line.com] at Internet
Date: 1998-10-05 10:33
For starters, the group might consider deciding whether to give a warning to
potential users of the software that use of the software with the options
you have identified could result in certain legal consequences, in order to
shield OTP from potential liability, in case a court disagreed with your own
personal beliefs. Ancillary to that decision, you might consider obtaining
qualified legal advice as to the potential liability of OTP and/or its
active members with respect to such issues.
-----Original Message-----
From: Donald E. Eastlake 3rd <dee3@torque.pothole.com>
To: John Messing <jmessing@law-on-line.com>
Cc: ietf-trade@lists.eListX.com <ietf-trade@lists.eListX.com>; Steve Schear
<schear@lvcm.com>
Date: Sunday, October 04, 1998 7:34 PM
Subject: Re: OTP, OECD and tax collection
>
>It is up to the consensus of this working group as to what it wants to
>include, exclude, ignore, or consider in future versions of IOTP. I
>do not believe that the operation of software that permits certain
>options to be activated at the operator's discretion, such as the
>collection of taxes or the automatic copying of all messages to a law
>enforcement authority, constitutes consent to the actual activation of
>such options.
>
>I'd be interested in any concrete and specific suggestions you might
>have to improve the IOTP protocol.
>
>From: John Messing <jmessing@law-on-line.com>
>Message-ID: <000801bdefb9$bfdd9500$7825c5a9@www..azstarnet.com>
>To: ietf-trade@lists.eListX.com, Steve Schear <schear@lvcm.com>
>Date: Sun, 4 Oct 1998 10:09:27 -0700
>
>>This is one of those issues which is not as straightforward as it may
first
>>appear. Apart from merchants whose businesses are physically located
within
>>the borders of an EEC state, the power of the state to tax may depend upon
>>notions of extraterritorial application of the tax laws. Thus, if an
>
>My understanding is that there is some motion towards an agreement
>within the OECD nations which would eliminate problems of
>extraterritorial application of law for those countries.
>
>>American corporation sells goods to a German citizen and has no office or
>>outlet in Germany, then in a non-virtual transaction, there is little
legal
>>basis for Germany to claim the right to tax the transaction. The German
>
>It is my understanding that many places, such as Massachusetts, where
>I reside, have "sales and use" taxes which tax not just items sold
>within their territory, but also items imported into and used within
>their territory.
>
>>citizen had to have been physically located in another jurisdiction to
have
>>completed the purchase. But in a virtual transaction where the Internet
>>server and the seller are located physically outside of Germany, the
>>situation may be less clear. If Germany claims the right to tax any
>>transaction involving a buyer whose computer or delivery address is
located
>>within its borders, a question will arise about the basis in international
>>law of the power to tax. To the extent that consent to tax is one such
>>basis, then inclusion of software at the Internet server used by the
seller
>>which permits German taxation through OTP could arguably be implied
consent
> ^^^^^^^
>
>>to tax -- a result perhaps never intended by OTP or the buyer. It is quite
>>conceivable that Germany would hire an American attorney to collect such
>>taxes as postulated by this example through the American courts, which an
>>American corporation could not ignore. Apart from the issue of taxation,
>>there are other questions about extraterritorial applicable of laws, such
as
>>digital signature legislation, which involve similar considerations. In
>>order to avoid such questions, OTP refused to consider them in earlier
>>drafts. Taking a position or refusing to take a position on such issues in
>>light of the German request probably will result practically in a
>>substantive decision one way or the other, like it or not, which means
that
>>such questions can no longer continue to be ignored as either a
theoretical
>>or practical matter.
>
>Thanks,
>Donald
>
>>-----Original Message-----
>>From: Steve Schear <schear@lvcm.com>
>>To: ietf-trade@lists.eListX.com <ietf-trade@lists.eListX.com>
>>Date: Saturday, October 03, 1998 10:23 PM
>>Subject: RE: OTP, OECD and tax collection
>>
>>
>>>David Burdett <David.Burdett@mondex.com> wrote:
>>>>Tax evasion is as old as the centuries. I doubt that OTP if its used for
>>>>tax collection by the governments will change peoples inclination to pay
>>>>(or not pay) one bit. The point is, if governments want to collect taxes
>>>>then they will find a way to do it and most merchants who have a
>>>>reputation to protect will follow it.
>>>
>>>This is really a rear-view outlook. If we were in the 16th century, its
>>>like saying that because the Church has all this authority we're not
going
>>>to use the press to print anything secular.
>>>
>>>While it may be true that in the short run merchants with reputation may
go
>>>along with this foolishness, as long as their risks are low consumers
will
>>>shop wherever the price is lowest. 10% or more tax is enough separate
most
>>>consumers from their guilt and place the loyal merchants at a
considerable
>>>disadvantage. The complaint merchants will pressure the governments to
get
>>>tough (regulation always favors the regulated). If governments are not
able
>>>to pressure the non-complaint merchants, as I believe they will not (as
>>>they were unable to stem the Eurodollar trading), this is the beginning
of
>>>the end game for such taxes on the Net and perhaps in a broader sense as
>>>more commerce moves to the Net and places local merchants at an
increasing
>>>disadvantage.
>>>
>>>--Steve
>>>
>>>
>>>-----------------------------------------------------------------------
>>>Message addressed to: ietf-trade@lists.elistx.com
>>>Archive available at: http://www.elistx.com/archives/ietf-trade/
>>>To (un)subscribe send a message with "subscribe" or "unsubscribe" in the
>>>body to: ietf-trade-request@lists.elistx.com
>>>
>>
>>-----------------------------------------------------------------------
>>Message addressed to: ietf-trade@lists.elistx.com
>>Archive available at: http://www.elistx.com/archives/ietf-trade/
>>To (un)subscribe send a message with "subscribe" or "unsubscribe" in the
>>body to: ietf-trade-request@lists.elistx.com
>-----------------------------------------------------------------------
>Message addressed to: ietf-trade@lists.elistx.com
>Archive available at: http://www.elistx.com/archives/ietf-trade/
>To (un)subscribe send a message with "subscribe" or "unsubscribe" in the
>body to: ietf-trade-request@lists.elistx.com
>
-----------------------------------------------------------------------
Message addressed to: ietf-trade@lists.elistx.com
Archive available at: http://www.elistx.com/archives/ietf-trade/
To (un)subscribe send a message with "subscribe" or "unsubscribe" in the
body to: ietf-trade-request@lists.elistx.com
-----------------------------------------------------------------------
Message addressed to: ietf-trade@lists.elistx.com
Archive available at: http://www.elistx.com/archives/ietf-trade/
To (un)subscribe send a message with "subscribe" or "unsubscribe" in the
body to: ietf-trade-request@lists.elistx.com
[Date Prev] | [Thread Prev] | [Thread Next] | [Date Next] -- [Date Index] | [Thread Index] | [ietf-trade Home]
Powered by eList eXpress LLC