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WTO Ministers Extend Internet Tax Ban For 2 Years

05 December 1999

At last week's controversial Word Trade Organisation meeting in Seattle, ministers agreed that the current tax moratorium on Internet sales should be extended for up to another 2 years. After the meeting U.S. Commerce Secretary said the tax ban "probably won't be permanent, but it probably will last at least 18 months to two years."

With current estimations predicting that about half of the $2 to $5 trillion of e-commerce business anticipated in the next six years will be generated outside the United States, it essential that a common approach is taken on the complex question of internet taxation.

Hi-tech and telecommunications industry players such as Microsoft, AOL and AT&T have been lobbying hard for a tax free internet and have focused on convincing the WTO to permanently eliminate customs tariffs and not extend existing trade rules to cover e-commerce transactions. "It will be good for the world's consumers and international economic growth," a Microsoft spokesman said this week.

This view is shared by the Clinton administration, which has worked to overcome the major stumbling block in the WTO by convincing less-developed countries who are dependent on tariffs for revenue that imposing taxes on e-commerce would eventually also hurt their traditional trade revenue sources as e-commerce grows.

According to U.S. Under-Secretary of Commerce David Aaron WTO ministers generally agree "governments should not be over-regulating this brand-new commercial dimension". However given that the 135-nation WTO has only just mapped out the agenda for the next round of market-opening negotiations, it is unlikely that any formal agreement will be reached soon.


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