The Government may be unpopular with much of the public, but not with UK ISPs. Chancellor of the Exchequer Kenneth Clarke has finally listened to the industry's lobbying and decided to back European proposals which would, for the first time, make US service providers pay VAT on their UK operations.
This should level the playing field for home-grown ISPs, which have suffered due to the fact that VAT is levied on their services but not on those coming from the US. However, it does mean that if you currently use an American service such as AOL or Compuserve, you could end up paying more.
US ISPs have yet to decide to pass on the VAT charge to customers, but it seems likely they will. And if one does, they all will. Expect more news soon on the imposition of sales taxes for Internet transactions, as governments around the world start to wake up to the global village.
National governments are too addicted to taxation to miss this opportunity.
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