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Taxing Free Software
Jarek Sygitowicz writes "Lets look backward: nearly a month ago. One officer taxed 6 GNU/Linux
boxes and two Star Offices at the price of 6 Microsoft Windows and 2
Microsoft Offices. The affair was widely commented and stirred a wave
of protests. We heard from various sources that the Government, trying
to patch a big hole, is preparing for the impossible: a tax on using
Free Software." Sounds crazy? For now this is true only in Poland (which, btw, has the coolest tld, even if they have a messed up tax system ;)
Well, I don't know anything about Polish Law. But I can see how this might happen: where there are VAT or other taxes on property/transfers, then some sort of fair market value must be used for the taxation. A common method of tax evasion is undervaluing the property.
The Polish tax official obviously thought that Linux and StarOffice were at least as good as MS-Windows and Office. As you going to dispute his good judgement? So they were worth as much, and should be taxed as much.
This is not an easy dilemma for free software to solve. The concept of something good for nothing sounds impossible to many people. Tax officials read that impossibility as tax evasion.
What's 100% of NOTHING. ;-)
;)
Besides, you are taxed if you BUY a distribution from a STORE. Here in Ontario Canada, if you bought Linux in a store, you would be charged 7% PST and 8% GST. But it's FREE software...
In a store, though, you are not buying that Linux distro. You are buying the packaging, the medium, the service of bringing it to the store and to you, the clerk earning minimum wage that sneeres that you as you walk out of the store, and a lot of other tangable things. Again, the SOFTWARE is free, the retail packaging is not.
It would be widely unfair if, for instance, they imposed a tax simply for running software. That is silly and will never happen.
Think people. Fuck, it's like the whole world is having this massive brain drain. Another person posted, already, that when shipping their Linux CD's they over-value on the shipping label and some countries duties will add upwards of $50 onto the price... but you ARE paying for shipping.
Slackware 7.1 cost me $5.00. $2.00 for the blank CD, and roughly $3.00 in ISP connection fees. ALL of that was taxed and paid in full. So no matter HOW you get the software, you WILL be taxed for it. But you did get a service (your ISP) or a product (the CD) from someone which the government, in our world, has a right to tax.
Bye now
Price, Quality, Time. Pick none. What, you thought you had a choice?
...demand a sun tax! We nolonger can afford to compete against this free source of energy!
I'm a writer, a poet, a genius, I know it. I don't buy software, I grow it.
The concept is rather similar to several of the taxes we have in Sweden. You are often taxed by the perceived value of something that you own or have the use of. For example, we pay a property tax that is related to what our house MAY bring IF we sell it. That is, if you own a small house by the seaside, you are taxed by what similar houses have been sold for - even if you have owned your house for 50 years, and never made a penny out of it. In such a context, it's not at all hard to understand the Polish reasoning: the value of StarOffice is about the same as the value of MS Office (which is true, btw), so you should pay a similar amount for having the use of it. Of course, it's absurd, but many taxes are...
Well, I don't know anything about Polish Law. But I can see how this might happen: where there are VAT or other taxes on property/transfers, then some sort of fair market value must be used for the taxation. A common method of tax evasion is undervaluing the property. (emphasis mine).
Well, this brings up an interesting point. What you buy when you "buy" software is the right to use the software. The market value of that right, like any other good, depends on the balance between its utility and scarcity.
Normally, people are willing to pay more for something with greater utility, but this ignores scarcity. Nothing has more utility than air but you can't very well tax that as it has no market value. I suppose it should not be surprising, but it is ironic that license agreements actually increase the market value of software by decreasing its utility. That is by restricting user rights to redistribute in particular, the owners of the software create scarcity where none naturally exists.
So, this isn't a case of Grandma's diamond ring (which coincidentally has practically no utility) which has a market value equivalent to more or less similar rings. Free software has no market value, although it has great utility. Like the air, it is in abundant supply and so it is free (as in gratis) despite its utility.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
Since prostitutes charge for sex, and married people get sex for free, they should pay a tax on sex, based on what prostitutes charge.
They don't say how the tax is evaluated. If it were a sales tax, then they would just tax shrink-wrapped CDs and be done with it. It sounds to me like it is probably a "property tax". This is where you have to evaluate the value of all your property and pay a percentage on it. These are the most unfair types of taxes, because when you fall into poverty, not only do you lose your source of income, you have to continue paying taxes on all the stuff you own.
Assuming that they have extensive property taxes, their problem has nothing to do with attitudes towards free software. They need a fairer tax system accross the board--either a sales tax or an income tax; something non regressive.
Since it would be difficult for taxpayers to reform the system right away, they are forced to argue that the software has no value (obviously not true) or that it has less value than NT/office (may or may not be true, difficult to evaluate). The officer probably looked at the systems, reasoned that they do essentially the same thing, and evaluated them the same. It's actually kind of a backhanded compliment to the packages in question. For now, the taxpayer might want to ask for separate evaluations on the hardware and software, so that they can dispute one but not the other. What's tax court like on Poland?
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
A year or 2 ago, I ordered a few RedHat 6.2 CD's from www.lsl.com, I live in Canada, and when they arrived, I was charged $30 duty on them, the assesed value of the CD's was $220 a piece, even I only paid $2 each for them. This is not a new thing, they have been doing it for awhile here...
...there aren't that many well-reasoned responses here that are actually opposed to this nonsense.
Several people have pointed out that this has been predicted in "Free For All" and elsewhere, which is nice, but what to do about it? Some pointed out that taxation of real estate is based on perceived valuation if the property were sold -however, real estate is the only property treated this way in most places I know of.
Certainly Microsoft and other commercial software companies will put pressure on governments to do this sort of thing, as it will hurt the popularity of free software, and yes perhaps charging $0.01 for the license is one way around this... And, yes, it's Poland's own business but frankly the world is getting smaller and we owe it to ourselves and our friends in Poland to - as the first international political force with easy real-time communications among us - band together and oppose all governmental and big-business activities that threaten the society we wish to have on the Internet.
So, some issues seem to be getting ignored here.
One problem is that this poses a huge threat to the free exchange of ideas, especially if applied to the university setting (though students and universities are often given tax breaks)... MANY in the R&D community thrive on free software, and much of it has been written by researchers and hackers for community use based on a barter-like notion of roughly equal contribution from the community (in the form of patches, suggestions, bug reports, publicity, etc.) in return for use. It may thus be necessary to codify this into licenses: anyone who contributes to the software in any ways listed by the author are considered to be "creators" of the software and can not be taxed for using their own creation. Contributions could include applying the system to novel uses and reporting this back, promoting the system for use by others, etc. which would cover some end-users, too.
The government (in Poland in this case) is denying software creators the ability to set the valuation of their own software. If the government gets involved in price-fixing for taxation purposes, the competitive nature of the market that is allegedly a crucial part of the caplitalist system is undermined. If Microsoft and others can't provide value that makes their software worth more than $0 software, that's their problem. To get around this argument a government would need a complex system of taxation based on value to the enterprise using some pre and post installation performance metrics of the task being performed with the program and its value to the organization. Basing the tax on the price of "competing" products is government-assisted price collusion. Furthermore, it ignores the fact that there are reasons why commercial software costs money that do not apply to free software: centralized support, guarantees and warranties and some coherent - and monied - organization to sue if needed, etc. The value of the products is likely not actually the same if anything but a naive economic view (or a purely technical view of the operations of the software) is taken.
This kind of taxation is a kind of protectionism for large software corporations, and threatens to undermine the quality of software and stifle competition as people will come to expect governments to enforce the prices of software, and even commercial companies with competitive pricing can be hurt in such a scenario. Basically, everyone will be expected to charge the same price for their software or otherwise turn-over a larger portion of their profits to the government. Commercial organizations and free software developers alike would cringe at the thought of the government making more money than they do off their work - basically it seeks to undermine the community spirit that built the movement and force commercialization (and a fixed pricing regieme) in the industry, as well as to limit price competitiveness. It actually *encourages* price collusion and other anti-capitalist measures.
The Polish government is taking an outdated view of taxation which will be hard for governments to shake: that goods are the cornerstone of taxation. The US is already a service-based economy, so the US is quite happy to tax support services, installation services, etc. which can come with free software.
It is taxing a form of free speech, which I suspect the Polish constitution has provisions for because (having read part of it) it seems somewhat modeled on the US constitution... Basically, software, like books or music, is a form of creative expression. If I write a book and give it to you for free, if the government decides it's as entertaining as a $30 Steven King novel, should they be able to go and tax you for a $30 purchase you never made? It both forces you to consume, and stifles the ability of authors to freely distribute their ideas.
Finally, it undermines the licensing contract and thus any claims Poland could have to upholding such contract law. Basically, it gives the government the power to rewrite commercial contracts at will to suit its "needs"...
o/~ we are pissed, we are pissed, we have to resist... o/~ - ec8or
Once upon a time, I thought that only my native country had venial & corrupt politicinas whose actions favored the rich. Then I started reading the Internet, & the horror stories started to change my mind.
Since then, I've come to determine the only countries that are actually & proveably better run than mine are those (1) I've never been to, (2) I've never heard a complaint from a local about, & (3) have never made the news for some stupid act of its politicians. Right now the list of places with wonderful governments is down to Iceland, Latvia & Andorra.
Anyone want to post a horror story about one of these & prove me wrong? I figure it's only a matter of time.
Geoff
I think I see a trend here. Maybe for them it really would be easier to muzzle the entire internet than to produce p
Quit yer damn bitchin'!
A government (yes, even a Polish one) has to tax something now, doesn't it? How else can can a government stay in existence long enough to start wars, arrest people for now wearing seatbelts, and collect more taxes?
A governing body or entity can tax pretty much anything it wants --
The trick is avoid making inordinately large numbers of people feel like they are being singled out, unless the majority of people feel that this group is "bad" or is doing something "bad", like evil, rotten tobacco users (here in the US).
Taxing free software? SCREW YOU! Give up the money, "citizen"!
Harry Browne for President, 2004
The only thing that we learn from history is that nobody learns anything from history.
Speaking from my own experience from these parts of the world (though not exactly in the same country): This means that the treasury officer did not get his monthly share under the table. If he could he could have assigned the biggest fine possible. Just in case he is not forgotten the next time. He has kidz to feed ya know.
Baker's Law: Misery no longer loves company. Nowadays it insists on it
http://www.sigsegv.cx/
What other FREE things are there that are taxed?
Why does this idea have the same ring in my ear that the USPS internet tax does?
On a lighter note, it would be hard to re-enact the Boston Tea Party substituting free software as the cause. What do we do, chuck our RH5.2 and 6.0 cd's into the bay?
"A group of bearded men dressed insensitively as native americans further polluted the bay by dropping large amounts of unwanted compact discs into the water. The zealots attempted to sneak away, but were apprehended. "
%kill -9 taxation
process taxation cannot be killed
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