Question

Assess the arguments for and against taxing e-commerce at an international level as opposed to a domestic level.

Answer 1

Arguments for e-commerce taxation-

1)The most commonly cited argument why e-commerce tax should be taxed is that failing to do so creates unfair advantages for e-commerce firms over main street businesses.These advantages not only include the benefits that accrue from thr ability to sell cheaper products but also the advantages of simplified record keeping and reporting - hardly tax - neutral policy.

2) E-commerce is itself big business and that potential tax revenues are likely to be substantial.As e-commerce matures,more sales will be made over the interney.these sales will ultimately carry over from sales that would have otherwise been made in a "mainstream " store.

3) Another concern is the fact that current sales tax laws are very considerably from state to state.Variations not only include differences in the tax rates themselves,but also on what is and is not taxed.federal internet taxes are therfore necessary if for no other reason than to level a now - uneven playing field.A uniform tax code eliminates these distortions and potential disloactions,simplifies tax collecting,and encourages tax neutrality in the marketplace.

4) Proposals to elimante taxes on e-commerce penalize low -income taxpayers.low income taxpayers are the least likely to have internet access and buy goods online.exempting online purchases from taxes would benefit wealthy taxpayers and shift part of their tax buden onto low income consumers who buy goods in stores where taxes will continue to be collected.

Argument against e-commerce taxation-

1) One compelling argument is that the internet was created to foster the free exchange of information electronically.taxing sales on the internet violates this fundamental objective.such argument thorities also note that most internet consumers pay shipping and handling fees that often more than offset any sales-tax savings.

2) Tax scholars note that collecting and enforcing taxex and tax laws on the internet is unreasonable i.e.complex,unwieldy,inefficient,and expensive. Enforcement costs include defining what is taxable , determing applicable tax rates, identifying exemptions,updating rates changes,ensuring privacy,auditing collections,and prosecuting violators.

3) if all internet transactions were taxed ,multiple,overlapping,and discriminatory taxex are likely to occur, and imposing such a tax system is likely to harm internet commerce.

4) Almost every industry is now engaged in some form of e- commerce or has initiated internet based services.Imposing burdensome taxex on e-commerce would discourage further efforts in this regards and likely slow innovation,job creation ,and economic growth in general.

5) It is also possible to argue that creating internet taxex is likely to require a substantial increase in government tax supervision and enforcement efforts .An agrument against internet taxation is the cost of compliance and enforcement.

6) A final agrument against internet taxation is that such tax rules have the potential to violate individual rights to privacy.