The prosecution at the end of February in the US of the operator of an online gambling site based in Antigua is a cause for concern by all offshore jurisdictions aiming to foster e-commerce on their shores.

While Bermuda does not allow Internet gambling operations, or sellers of online pornography to register on the Island, the decision, if upheld, may serve to put the brakes on the operations of offshore entities operating offshore, and possibly may serve as a precedent in the EU.

Jay Cohen, operator of www.wsex.com, otherwise known as the World Sports Exchange, was found guilty in a New York court of eight charges, including conspiracy and placing a wager over a telephone. Mr. Cohen's partners, Steve Schillinger and Hayden Ware, remain on the lam as fugitives.

While Mr. Cohen may win a reversal in Appeals Court, the case has served to highlight the operations of companies outside the US selling products inside the US. Gambling is legal in Antigua.

In the US it's illegal to use a telephone to gamble across state or federal borders. The decision is a wake up call to online companies operating worldwide.

No longer can they just get by with simply knowing the law of the jurisdiction, say Bermuda, in which they are based. They're also going to have to know the laws of 10, 20, 30 or more jurisdictions.

They are multinationals from the day they go online.

I smell lawyers and higher costs.

Newsweek commentator Robert J. Samuelson has made a pertinent argument, perhaps echoed by the cries of Bermuda retailers crying foul over their losses of revenue, for taxing sales made over the Internet.

"Exempting e-commerce from the sales tax gives it a huge (and unfair) subsidy,'' he argued in the March 6 issue of the magazine.

He's correct of course. Operators on the Internet have been getting a free ride.

Mr. Samuelson points out that University of Chicago economist Austan Goolsbee has estimated that if people had to pay sales taxes, e-commerce might be 30 percent lower.

For these people, shopping on the Internet for a lower price simply means shopping for less taxes.

The efficiency of the economy is hurt as inefficient e-business get an unfair advantage over regular more efficient business. Governments, and indirectly those who don't own a computer, eventually lose out from a smaller tax base as consumers shift to online shopping.

"It's a disguised subsidy that favours one type of business over another and could make tax avoidance a permanent feature of the Internet society,'' Samuelson argues.

"Companies on the Internet ought to compete with traditional stores on an equal footing. People would buy online if e-commerce offered lower prices, more choices or greater convenience. They would not buy simply to avoid taxes.'' Forrester Research estimated that in 1999 business-to-consumer e-commerce amounted to $20 billion, of which about $13 billion was taxable. While $140 million of taxes was collected, the company estimated that the states lost about $525 million in sales taxes.

Forrester has also called for a tax on e-commerce.

There's more to Samuelson's argument having to do with taxes on telecommunications services. But while I agree with the general principle, that businesses should operate on the same level playing field, the next question that needs to be answered is "How?''.

This is both a technical and political question that needs to be answered.

Companies can avoid charging taxes for goods purchased over the Internet, especially for services or downloadable products such as software.

Collection is going to be a problem. Governments are also going to have to co-operate in regulating Internet companies that operate inter-jurisdictionally, that is, most of them. Just like the Antigua gambling case, the forecast on the horizon for Internet companies is more regulation and more administration costs. The free ride is going to be over soon as a narrow window of opportunity closes.

Gadget of the week: Reel One Media has developed a CD-ROM business card called the PalmCD. According to a press release from the company the new card is the same size as a conventional business or credit card and can be played on any CD-ROM drive or audio CD player. The cards can store any type of digital information, multimedia presentation, Web links, audio, video, 3D animation or software demo. Contact the company at 410-817-4888 or www.reell.com.

I didn't have space in last week's column to mention a bit more about the revitalisation of the Computer Society of Bermuda (www.csb.com). In addition to working to bring the International Computer Driver's License (ICDL) certification programme to Bermuda and starting a pilot training scheme last week, the organisation also wants to expand its activities beyond the ken of those who desire to sell more product or talk shop.

That is, I hope the organisation is working to broaden its mandate to become more inclusive, to have a more social goal of improving the community. I mean the organisation should be a place for talking shop for those who want to, and a place for the purveyors of product. But more important, it would be good for Bermuda if all those highly talented people got together to devote some of their expertise in helping bring the community on board. Computers are a powerful tool, and as we can see with the rise of the Internet, have a transforming power.

The organisation's website (www.csb.bm) seems to point in the right direction.

The organisation is also attempting to set up a information technology job search engine and a job site for students. The CSB also wants to start an education assistance programme to provide technical assistance to educational institutions, and to assist non-profit and charitable organisations. Current projects in the latter area include work with the Centre on Philanthropy, the Bermuda Biological Station for Research Science Network, and RecycleIT, which accepts donations of equipment for refurbishment and donation to the community.

The organisation's annual exposition is scheduled for April 2000. Perhaps the organisation can also highlight the work it wants to do in this area. In the past the organisation has been hampered because often the people in the executive have been torn between devoting their time to promoting their respective companies and promoting the organisation.

Guess which one lost. This problem often caused internal dissent within the organisation.

From what I can see I think this problem is being fixed.

Now what's needed are volunteers and company backing to help pull these ambitions off.

Any takers for those who can devote some of their computer time and assistance to these useful goals? Tech Tattle deals with topics relating to technology. Contact Ahmed at ahmedelamin yhotmail.com or (01133) 467012599.