Schroeder Rules Out Internet Tax

Chancellor Gerhard Schroeder on Monday ruled out a tax on Internet use that critics said would stifle the development of the Web in Germany, Europe's biggest economy.

In a speech to business leaders, Schroeder quashed a new Finance Ministry rule floated last month, to tax businesses every time employees use company computers for private Internet surfing.

"Private use of the Internet in the workplace is tax-free," he said at the World's Fair in the central town of Hanover. And people who use their own personal computers to log onto the Internet for work are entitled to tax breaks, he said.

Telecommunications and computer firms had criticized the government for the tax plan, arguing that it would be a bureaucratic nightmare that would discourage many people from becoming familiar with the Internet.

Still, the government will push ahead with new rules to protect intellectual property rights, Schroeder said.

Many companies are upset with plans to levy a tax on the makers of equipment such as high-speed modems and CD-burners that can be used to copy protected material. The proceeds would go to rights holders such as pop stars and authors.

Schroeder stressed the government's commitment to seeing every school online by the end of next year, even though only one in three schools currently has access to the Web. He said more adults especially the jobless must learn about the Internet.

Government and industry leaders have been scrambling to solve a chronic shortage of skilled workers in the country's information technology sector, a key source of new jobs in a country struggling to shake off high unemployment even during an economic upswing.
As a short-term measure, the government is trying to attract foreign computer experts by offering 20,000 temporary work permits.

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