UK Opposition Warns Over E-Business Threat To Revenue

by Jason Gorringe, Tax-News.com, London

30 January 2002

The Tory Party has warned UK Chancellor Gordon Brown to consider the risks posed to government revenues by e-business very carefully.

The dilemma facing the Chancellor is similar to that recently encountered in the United States, where it was eventually decided to extend a moratorium on internet sales tax until a coherent approach to the problem could be found.

Conservative Party Financial Spokesman, David Lidington observed earlier this week that the government needs to move away from the idea of taxing tangible goods in fixed locations, as increasing trade in intangible digital products could create problems in terms of discerning when and where a transaction had taken place. He also warned that the mobility of virtual businesses could pose a real threat to corporate tax revenues.

'One is not at a stage of panic, but there are some very interesting and important questions to be raised,' he commented in the House of Commons earlier this week.

The importance of the issue appears not to have escaped the government, however, as the Paymaster General, Dawn Primarolo revealed recently that it is engaged in discussions with the OECD on 'this and related e-commerce issues'.

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