Legislation is key in e-commerce

All over the world the issue of digital law is being raised and because of growing demand by businesses and consumers alike, governments are starting to sit up and take notice. In South Africa, the Department of Communications has published a green paper on e-commerce, but currently there exists no leglisation that regulates or attempts to address the question of e-commerce and the New Economy on a substantive transactive basis.

However, Chris Greyling, business development executive points out that businesses need to take the risks that exist in e-commerce simply because a company cannot afford to ignore the Internet as a medium.

Greyling believes that governments can and should draw lines, even in a field as dynamic as information technology. "In certain cases the public has the right, indeed the duty, to declare some fields off-limits for further `improvements` because these innovations are just too costly.

"This sounds draconian," he says "but consider the policy of exempting e-retail sales from taxation. Many innovators applaud this example of enlightened restraint by lawmakers. Taxes on sales via the web would stifle innovation by discouraging customers and adding to the already high burdens on those building e-businesses.

Greyling points out that innovators shouldn`t count on a permanent tax holiday. "The policy is discriminatory. It gives a benefit to e-businesses that bricks-and-mortar retailers lack. Someday, and probably someday soon, sales taxes will be imposed on e-retailers. While raising costs, this obligation will stimulate further innovations as e-commerce vendors scramble for ways to more efficiently satisfy the tax collector`s demands."

The taxation example shows that government demands on the IT world are neither unreasonable nor insurmountable in practice. Such demands, moreover, can actually quicken innovation because they create a common target for innovators. Think of how, in Europe, rapid innovations in wireless technologies followed the imposition by government of a single communications standard on industry.

Greyling believes that even when regulations don`t stimulate innovation, they are justifiable. "Consider, for instance, how unbridled innovation in digital copying threatens to kill the proverbial golden goose of IT. (eg. Napster) Advances in digital copying are creating tools that make it fast and easy to copy songs and movies, downloaded from the Internet and then distributed by e-mail."

Greyling is adamant that drawing a line isn`t futile. "It creates a useful target for innovators, at least those who recognise that the purpose of technology is to serve people and that societies don`t remake themselves merely to satisfy a technological imperative. Drawing a line also sends a broader message to innovators: Rules still apply to their corner of life."