Market failure has been much in the news of late, but one notable breakdown has attracted little attention: spam. Some 200bn junk emails are sent daily. More than 40bn come from the US and Canada, and about 6bn from Britain. Estimates vary, but the best guess is that more than 90 per cent of all email is spam.
What causes this stupefying supply for which there is no apparent demand? The answer is simple: sending an email is free. Yet billions of junk messages take a toll in complex and haphazard spam filters, productivity losses and misuse of increasingly crowded bandwidth. Spam is used to spread viruses and sell fake or fraudulent goods. Moreover, there is an increasing risk that spam will make legitimate email a form of second-class post.
Internet service providers (ISPs) have proposed price mechanisms to control it, but users objected. The time has come for a public sector remedy: a tax, perhaps no more than 2p, or 3c, on every email sent. Opponents will argue that collecting the tax is impossible or unfair. Yet the status quo is unworkable. Since early 2007 the global volume of spam has more than trebled. To stop this blizzard of unwanted messages, ISPs and most large businesses spend a sizeable chunk of their IT budget filtering out obvious junk. Despite this, most of us spend time each day clicking "delete"—and the deluge is getting worse. A unit tax on email would stop most spam. A peddler sending 1m messages a day hawking cross-border pharmaceuticals, for instance, would have to balance the uncertain revenues against the tax cost of £100,000 or $150,000 a week. Trying to con people out of money or their bank password would become a risky gamble.
From a practical point of view, such a tax is feasible. Whether you're using a browser or a client-based email system, every email sent must have both a sender address and a recipient address—each in the form "someone@somewhere." This makes all emails easily identifiable by ISPs, through which most private internet traffic is routed. As they already impose a monthly charge on users, it would be simple for ISPs to pay the tax and pass it on in the monthly bill to their users. The first 400 or 500 emails sent each month can be included in a fixed charge, with the rest charged on top. The tax on emails over the maximum would remind users of the cost—just as already happens with text messages on mobile phone calling plans. Corporate users are likely to co-operate in paying a tax that reduces the cost of fighting spam and other "bad stuff" on the internet.
Spam is, of course, an international problem, requiring co-ordinated action by governments. But three-quarters of all spam comes from 16 countries, most of which are already members of the OECD. A uniform tax code pushed by the OECD, similar to their widely used double tax treaties (which stop people being taxed twice by different countries) would be in everyone's national interest. Rogue states that host spammers and don't co-operate could be denied access to international markets, as is already the case with physical mail. Co-operation between countries would also help to fight some of the malware and viruses that infect the internet.
How much would it cost? An average employee might send 100 emails a day. At 2p or 3c, the tax would be £2 or $3, less than a large caramel macchiato. The tax would be a tiny fraction of the salary costs incurred in composing the emails themselves. For companies the cost would be partly offset by savings in the spam war. By the same token, 40p or 50p a day will not change the life of broadband subscribers, even if they average 20 or 30 emails daily.
Many organisations (including charities and consumer-facing businesses) will find it worth their while to continue sending unsolicited emails. News organisations that send email alerts to subscribers would factor the tax into the cost of their service. The tax will not stop unsolicited communications, just as post charges limit, but do not kill, junk mail. An email tax would force senders to apply a simple test: is this message worth a penny to send?
Is there a downside? Like any excise tax, the move might be considered regressive. But for most users the cost would be offset by the ongoing falls in the price of broadband itself. The growth of blogs and social networks should head off claims that the tax would strangle internet freedom, as user-initiated website access will be unaffected. Above all, an email tax could safeguard the future of the internet itself. Peer-to-peer data transfers, video streaming and voice services like Skype demand ever greater bandwidth. When new capacity is needed, part of the tax proceeds could be used for investment. Best of all, the spam tax would remind us of a basic rule: pay for what you value. Email, like clean water and air, is not free. We may have a greater respect for our thoughts if we remember that sending them has a price.
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