UNintended Consequences of an Internet Takeover and a New Tax

David Williams

February 24, 2012

The United Nations has been very busy these days with talk of taking over the Internet and the World Health Organization (WHO) moving at lightning speed to implement new tobacco taxes.  According to The Daily Caller, “On Feb. 27, a diplomatic process will begin in Geneva that could result in a new treaty giving the United Nations unprecedented powers over the Internet. Dozens of countries, including Russia and China, are pushing hard to reach this goal by year’s end. As Russian Prime Minister Vladimir Putin said last June, his goal and that of his allies is to establish ‘international control over the Internet’ through the International Telecommunication Union (ITU), a treaty-based organization under U.N. auspices.”  The WHO describes its new tax regime, The Solidarity Tobacco Contribution (STC) as “a novel approach developed by the World Health Organization (WHO) in response to the recommendation made by the High-Level Taskforce on Innovative Financing for Health Systems to ‘expand the mandatory solidarity levy on airline tickets and explore the technical viability of other solidarity levies on tobacco and currency transactions'”  Both actions could mean bad news for consumers and taxpayers.

Besides the potential cost to taxpayers and the lack of need to regulate a dynamic industry, the most compelling argument against any government or bureaucratic takeover of the Internet is what happened in Egypt in January 2011 when the government denied Internet access to its citizens in the wake of their revolution.  According to a January 28, 2011 article in the New York Times, “Autocratic governments often limit phone and Internet access in tense times. But the Internet has never faced anything like what happened in Egypt on Friday, when the government of a country with 80 million people and a modernizing economy cut off nearly all access to the network and shut down cellphone service.”  The article went on to note that, “In the Internet era, governments have found many ways to control the flow of information — or at least to try to do so — by interfering with digital communications or limiting them.”  International control over the Internet (as described by Putin) could destroy the Internet as we know it.

In an effort to raise more money for international causes, the WHO is proposing a $.05, $.03, or $.01 cent tax on tobacco products, depending on the wealth of the country where the products are being sold.  According to WHO, “For illustrative purposes, WHO estimates that if all G-20+ Countries were to devote an additional small amount to existing or new tobacco taxation (US$ 0.05 for high income countries, US$ 0.03 for upper-middle income countries and US$ 0.01 for lower-middle income countries) for each cigarette pack sold, US$ 5.47 billion could be generated each year.”   Abdicating tax policy to an international body is foolish and establishes a dangerous precedent.  And, as always, U.S. consumers will be taxed at the highest level.  This is being done with no regard to the potential economic impacts of such a policy.  According to the WHO, “Do not allow concerns about employment impact to prevent tobacco tax increases,” and “Do not allow concerns about the inflationary impact of higher tobacco taxes to deter tax increases.”  This reeks more of social engineering and tax harmonization rather than a genuine concern for healthcare.  The scariest part is that this process started in 2011 and the WHO is hoping to start collecting the first of these taxes by the end of 2012.  This is breakneck speed for any government bureaucracy.

Even though there are seemingly enough bureaucratic shenanigans to worry about at home, the United Nations is now upping the ante with an international takeover of the Internet and an effort to implement a global tax regime.

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