One of the grand joys of this internet, and social media in particular, is that it enables us all to find out what's going on. This is, of course, why this internet, social media, thing makes us richer. We find out what is going on.
It's possible to do this in entirely social terms. We, all of us, have at least the occasional view or opinion that is not shared by those nearest and dearest to us.
We might therefore think that the view is odd, even weird.
This is going to be reinforced in any purely physical world of interaction -- we can only interact with those we are physically close to after all.
Global social media lifts this restriction. We can now find out that while our interest, prejudice, is indeed rare, it's still true that among 8 billion people, there are others who share it.
My father, while working in a university, once edited a book on railway signalling systems. He thought that there would be perhaps 2,000 people who might be interested.
That, he thought, was the number of people who actually planned railway signalling systems around the world. He was very surprised to find many more than that interested and it was the internet that revealed that fact to him.
We can observe the effect in economics too. The formal statement is that the internet “allows markets to complete.” People who didn't know that they could cooperate with someone else now gain the information that they can.
So, they cooperate, things happen. What would not have happened without the ability to communicate now does -- market transactions that did not happen before the internet now do.
An example used, in all seriousness, is the man with a field full of weeds who did not know there was another with hungry goats two villages over.
Communications -- the internet, social media -- allow him to find out, goats eat weeds, an economic transaction has happened, and the world is much richer for it.
There's also a third effect we can think about.
Obviously, there's a lot about the world that each one of us doesn't know about. The world's a complex place, we can't all know everything.
But sometimes, that social media tells us something that we didn't know but which leads to: “What? They do that?”
Which is what was happening with people upset over the 7.5% withholding tax on content creators and freelancers on social media. The claim is that if someone works for some foreign customer, then the money that flows into their account in payment has to pay this 7.5% tax. It's not a specific and special tax, it's like a prepayment of the tax that will have to be paid when income taxes are sorted out.
Which then leads to a lovely amusement. For this tax should in fact happen. Here's the law, here's a company explaining it. This is a withholding tax -- it's not an extra tax, it's “we'll have this money now, thank you, then it all gets sorted out when the annual tax return is filed.”
The amusement being that “the National Board of Revenue (NBR) says that there is no provision for such tax deduction on freelancers' or expatriate income.”
Yes there is. It's there in the law.
What's actually happening is that social media creators are being affected by the tax. And the thing about social media creators is that they've got the ability to get the word out -- sorry, to inform everyone -- about this tax because, well, they're social media creators.
There's an old English saying, never argue with someone who buys ink by the barrel. That is, newspapers are set up to get the word out so don't do things to newspapers if you don't want the word to get out.
Or, in this more modern world, don't tax social media creators in a way that will make social media creators angry.
Should we have a 7.5% withholding tax on social media creators? That's not something I know, either yes or no. But if we shouldn't then we shouldn't have a 7.5% withholding tax on the foreign income of anyone -- and if we should then we should on everyone.
Which is what provides the amusement. For the tax authorities are running around saying this tax doesn't exist, when it clearly does. The reason we know about it is because of social media, obviously.
So we seem to have the authorities insisting that the tax should not exist because social media makes the tax public -- which does lead to the thought that the authorities think the tax should only exist if it is secret.
Fascinating, the things we can find out when information flows freely, isn't it? Which is why that free part of free speech is so important of course, along with the technologies, like social media, that allow it.
Tim Worstall is senior fellow at Adam Smith
Institute in London.
