[registrars] Regarding taxes

["Bruce Tonkin" <Bruce.Tonkin@xxxxxxxxxxxxxxxxxx>]

Hello Rick,

> 
> There is lots of literature on what happens to markets and 
> the poor with regressive taxes, "flat taxes" have the allure 
> of fairness which is why the rich rarely support them.

On the subject of taxes, there are two main types that I know of:

Income tax on an individual or company
- as I understand it, the tax is on the profit (ie revenue minus
expenses earning that revenue)

Value-added tax
- as I understand it, it is charged on the retail price

Neither tax is related to the number of goods sold.

In Australia, Melbourne IT pays a tax to the Government on our profit,
and we also pay 10% of our retail price to Australian customers to the
Government as a value-added tax (which is applied to all goods and
services) on behalf of our retail customers (ie we act as a collection
agency).

Whenever we change the retail price, we change the amount we pay the
Government.  Whenever our profit changes (which has not been in
proportion to domain name volumes over the last few years), our tax to
the Government changes.

I would have no problem with ICANN charging using either of those two
methods
- ie a percentage of profit from selling gtld names
- or a percentage of the retail sales price per name

The ICANN model of a per transaction fee is only equitable under an
environment where we are all charging the same retail price and our
costs are similar  (ie our per domain name profit is similar).  This is
clearly not the case, otherwise we would clearly be sales agents for the
registry.

I don't disagree that the increase in ICANN fees will affect a small
registrar, but it should be understood that the increase in transaction
fee (from 18 cents to 25 cents) significantly affects large registrars
that sell a large volume of names at a small or even negative margin.
The increase in transaction fee cost could result in some companies with
large number of names leaving the industry.   The real measure is
whether a small or large company is making a profit after the increase
in ICANN fees, as to whether they will continue in the industry.  This
is not directly related to the number of transactions.

The bottom line is that there is an large overall increase in fees for
registrars as a whole, and nobody  (big or small) is happy with the
increase they have to pay individually.

Regards,
Bruce