More give and less take

Since the most common way to access the Internet is with a home computer, the price of PCs needs to fall to encourage more buyers. This is happening, with promotional offers such as cheap computers in return for online subscriptions becoming more popular and, in some places, consumers can even get a PC for free if they don’t mind being constantly bombarded with online advertising. While most governments are happy to let the free market take its course, others see a need to give it a bit of a push.

The Singapore government has equipped 30,000 low-income households with second-hand computers bundled with free Internet access and basic training. This was done through community self-help groups and, to encourage industry participation, tax incentives were given to vendors and service providers to donate equipment, professional services and Internet access to the community through civic organizations.

The Province of New Brunswick issued a $500 rebate to anyone buying a new home computer while its local telephone operator, NBTel, pitched in with three months free Internet service. Former New Brunswick Premier Frank McKenna introduced the rebate.

McKenna says it turned out to be the most massively popular thing he ever did as a politician, although he wasn’t sure why at the time. “I understood it better later,” he says. “What they would tell me privately is that you’ve always been taking from us and this is the first time that you’ve ever given us anything so we’re going to take advantage of it. And they did. We sold every computer in every store in our province.”

Some governments have toyed with the idea of exempting computers from taxation.

The state of Pennsylvania proposed two one-week opportunities per year to purchase a personal computer without having to pay state or local sales taxes, but this simply promises two weeks of Boxing Day madness every year. The Swedish government feared that people who already had a computer simply would have used the straight tax exemption. The government wanted to find a way for employers and employees to develop IT skills together, thereby building the knowledge economy.

In 1998, the government made company-provided home computers a tax-free benefit, on condition that they were offered equally to all employees. Companies rushed to dole out web-connected PCs to staff. With their employers deciding specifications, negotiating good rates and setting up Internet accounts, it became a cheap and easy for Swedish workers to obtain a home computer. PC sales boomed in Sweden and the country was pole-vaulted into first place in the Internet league tables, with about 60 per cent of the population online.

Because the information society benefits from having more participants, the high number of Swedes with Internet access has driven the demand for electronic trade and online services. Internet banking took off soon after the home PC program. There is also a pay-off for the government in providing its own online services.

“What it does to help us develop e-government is an extra bonus. Our focus on education and learning and closing the skills gap is not only a democratic issue of haves and have-nots but primarily an economic issue of increasing productivity and competitiveness by investing in human capital and by helping new structures to develop,” says Leif Pagrotsky, Sweden’s trade minister.

*Article extracted from ‘eGov: e-Business Strategies for Government’ by Douglas Holmes, published by Nicholas Brealey Publishing, ISBN: 1-85788-278-4. US $29.95. To order,