The tax-raising powers of national and state governments are under serious threat from the rapidly expanding e-commerce economy. One side-effect of our increasing dependence on technology, especially once we have fully embraced the concept of wireless networking, is tracking money flows. That is why governments are in a mild state of panic about the potential loss of tax revenue. As geographical location diminishes as a marketing factor, offshore locations will be even more capable of competing with onshore rivals while providing additional confidentiality and less bureaucracy.
As a direct result of this, I have decided to set up my own cyber tax haven. People are still too hung up on the physical and the geographically fixed, but I think they are beginning to realise there is a parallel universe out there. My cyber tax haven can offer 24-7 heaven, without even having to get out of your chair. You certainly don’t have to fly anywhere. And I get to make a turn on all the money that flows through the system.
It seems the internet is going to turn us all into couch potatoes in the end, so I’m just getting in early with my bid to be a sort of cyber-Jersey. You sit at your PC or digi-TV and control your ‘cash’ flow in RichBanc, your investment portfolio using my global feeder fund product and your trust arrangements using my menu of asset protection services. The important factor within this concept is the quality of distribution and delivery, as much as it is quality of the underlying asset management. The business is global and I will provide the hub. I will be a low rather than no tax environment, allowing me to cream off a few basis points from corporates who use my domicile and to levy some form of consumption tax like they have in Bermuda.
I’ve tried to think of a way that we could dispense with the need for lawyers, but if we are going to have order and do business in a civilised manner, I guess we need them. And once we have cyber-funds permissible under Global Funds Directive version XVII, I’ll want to avoid the sort of authorisation queues that dogged Luxembourg at the end of the last century. So I have found some good-natured and pro-active regulators (from another planet, obviously).
Those who would seek to tax e-commerce ask why net users should get a tax break, as they are precisely the people who should be taxed. The counter argument is that the internet is as much about small businesses being able to compete globally with much bigger rivals as it is about freedom of information. Taxing e-commerce risks destroying many of the unique properties of the internet.
Estimates of the extent of e-commerce are increasing all the time. One of the most recent I have seen suggests $1.3trn by 2003. Sounds like a lot. Much depends on the future attitude of governments and trade federations towards e-commerce. In the US, the Internet Tax Freedom Act has been created on a principle that information should not be taxed. The argument runs that the internet is inherently susceptible to multiple and discriminatory taxation in a way that commerce conducted in more traditional ways is not. The ITFA puts the issue on hold by banning state and local governments from taxing e-commerce until October 2001, when the matter will be re-addressed. By then, it is assumed that tax authorities and trade federations, not just in the US but worldwide, will have had sufficient time to assess what impact the internet is likely to have.
You’ll notice that there’s no mention of the word ‘offshore’ in my business model. There’s a lot of uncharted water on the internet and ‘offshore’ is a word that will draw you into some hazardous areas; places where they appear to have a lot of palm trees and million-dollar yachts. This is clearly a sham – as any fool knows, there are no palm trees or yachts in cyberspace.
What I am offering the cyber couch potato is a lifestyle experience to suit any taste. So in true net marketing style, from your homepage at Rich.com you can not only play the markets, take in a round of golf at the course of your choice, play the gaming tables in Monaco and shop at Bloomingdales or, if you prefer, Tesco. Scuba diving represents more of a challenge.