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Can Governments Tax the Internet?

Posted by Dan Pope on Oct 28, 2014 11:52:13 AM

One of the biggest issues when it comes to the global digital divide is the cost of technology, as developing countries struggle to afford installing telecommunications hardware while residents see Internet access as a luxury. This is why Facebook founder Mark Zuckerberg recently announced his plans for a “911 Internet” – an Internet that would be completely free to use by those in developing countries.


However, this week there have been protests across the world over governments’ plans to tax the Internet. Currently, there are no such plans in the UK, however the Federal Communications Commission (FCC) in the US and the Hungarian government have both recently put proposals forward. This isn’t the first time that the FCC has been in the news this year over its plans to regulate the Internet, as even though they claim their efforts are in a bid to secure Net Neutrality some have claimed that they are attempting to control it.

The FCC argued at the beginning of this year that broadband should be placed under Title II of the Communications Act 1934 as it is an “interstate telecommunications service”, however by doing so ISPs would be forced to pay a tax of around 16.1 per cent. This cost would ultimately be passed on to consumers, making the Internet even less affordable to those on the lower end of the digital divide. Furthermore, industry experts have argued that the government should not have control over the Internet and that this would ultimately destroy the Open Internet instead of protect it.

So far it has not been confirmed whether the FCC’s proposals are going ahead, however they may want to take note of the reaction in Hungary where the government has recently proposed to tax Internet data transfers. Last Sunday thousands of protesters gathered in the capital of Budapest in order to demonstrate their anger over the plans, with many claiming that it is against their democratic rights and freedoms.

After the government’s plans were made public a Facebook page was set up in order to arrange the protest which currently has over 210,000 likes. In a press release the owners of the page stated: "The move... follows a wave of alarming anti-democratic measures by Orban [Hungary’s Prime Minister] that is pushing Hungary even further adrift from Europe. The measure would impede equal access to the Internet, deepening the digital divide between Hungary's lower economic groups, and limiting Internet access for cash-poor schools and universities."

Attila Sos, 43, who attended the protest, added: "This would be a double tax on us, as I have already paid a sky-high VAT when I bought the gadgets, computer and router. This is a good occasion for a lot of people to come here to show that they are discontent with the government's tax and economic policies. This was only the icing on the cake.” Meanwhile, 21 year old Krisztina Nagy said: “The Internet connects people and it should not be limited.”

Protestors gave the government forty-eight hours to withdraw their plans, threatening to hold another protest on Tuesday 28th October. The ruling Fidesz party has therefore stated that today they will make an amendment to their proposal which will cap monthly payments of tax to 700 forints (£1.79) per month, and that this will be paid by ISPs. However, protesters claim that this cost will ultimately be passed down to them and that they are already struggling to afford the Internet in Hungary.

Even though there are no plans for the Internet to be taxed here in the UK, these recent issues have highlighted the growing concern over the digital divide and the affordability of high-speed Internet connections. Fluidata has often wrote about the issue of the digital divide, and here in the UK we have aimed to alleviate the problem with our Service Exchange Platform (SEP). However, it is essential for governments across the world to also help tackle the issue and therefore refrain from implementing new regulations which will restrict the affordability of the Internet for those on the lower end of the economic scale.

Topics: FCC, Net Neutrality, open Internet, digital divide, News