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UN 'bit tax' proposal draws fire

United Nations proposal for a 'bit tax' to pay for Internet access in developing nations is drawing fire from U.S. lawmakers and high-tech executives.
Written by Maria Seminerio, Contributor

While critics said the report may be well-intentioned, they maintained it would have the opposite effect, creating a regulatory structure that could ultimately stifle the Internet's growth.

House Majority Leader Dick Armey on Thursday sent a letter to his colleagues in Congress and to President Clinton, urging them to reject the proposal as an "unnecessary and burdensome tax on the Internet."

"Every time you turn around, it seems there is another agency or bureaucracy looking to get its greedy mitts on the Internet through new taxes," the Texas Republican wrote. "U.S. taxpayer dollars should not be used to support UN reports pushing this kind of redistribution policy. I urge the Administration to reject this report and the policy suggestions it makes," the Armey letter states.

Armey's opposition to the idea grows out of the GOP conviction that new government regulations will ultimately hurt the Internet, a spokesman said. "We're opposed to any new tax, particularly when you're talking about an industry that has driven the economy," Armey spokesman Jim Wilkinson said in an interview.

The proposal came in the agency's annual Human Development Report, issued earlier this week. The report compares the quality of life among citizens of various regimes, using such factors as life expectancy and literacy rates. Agency officials said in the report that a tax of a penny on every 100 e-mail messages sent would generate $70bn (£42.7bn) a year to help build telephone and Internet infrastructure in poor nations. "Market forces alone will not rectify the imbalance," the report states. "Governance of the Internet should be widened to bring in the needs and concerns of developing countries. To ensure that the global communications revolution is truly global, funding is required."

But money is only part of the issue, some observers said.

"In some parts of the world, you need telecommunications deregulation and competition to make the price of service lower. You also need education so that people can make use of the Internet and make money to pay for it," said Esther Dyson, interim chairman of the Internet Corp. for Assigned Names and Numbers, in an interview with ZDNN.

Only "investment and philanthropy in infrastructure overall," including improvements to health care and education, will help undeveloped countries share in the telecommunications-fuelled economy, Dyson said. "They do not need a tax as proposed by the UN," she said.

Political changes are also critical in many areas, said Bob Frankenberg, president and CEO of Encanto Networks, which produces small business Web servers. "In many countries, the government still controls the press, TV and radio. They see the Internet as a new powerful medium outside their control," said Frankenberg in an interview.

Since governments of some developing nations fear the "loss of control" that comes with free and open Internet access, their reluctance to embrace the technology is as much a factor, if not more so, than poverty, he said. "We will solve the technical barriers, but the political barriers are much more resistant to change," he said.

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