The government is urgently examining the issue of how to tax Internet transactions, a minister has revealed.
Speaking at a meeting of the Computer Services and Software Association (CSSA ) in London, John Battle, Minister of State for Industry, Energy, Science and Technology at the Department of Trade and Industry, said the issue must be resolved soon. "I don't think we have addressed it seriously yet," he said. "It's a problem we have only just started to see on the political radar."
"We've got to address this, or Gordon Brown will panic," he joked. "There are two extremes of the spectrum, panic and complacency, and I need to discuss this issue with my colleagues."
Battle said the government was well aware of the importance of the issue, which revolves around means of taxing electronic transactions. When tangible goods are bought over the Internet, the goods are subject to the usual tax laws on sales. But when users buy intangible goods and services from the web, such as software from overseas, it is difficult to enforce taxation.
The US government has already taken a stance on Internet commerce, as President Bill Clinton announced last month he wants to see a "free trade zone" on the Internet to encourage electronic transactions. In the following week, EU ministers tentatively agreed with his position, although German economics minister Gunter Rexrodt emphasised "there will not be a worldwide duty free shop on the Internet".
"We want the Internet to be as open as possible," pledged Battle. "But we ought to apply the same laws on-line as off-line."
At the CSSA meeting, Battle also renewed the government's commitment to the UK technology industry, stressing its belief that IT should benefit all sections of society. The IT and telecoms industries are "fundamental to the competitiveness" of the country, he said.
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