Question

In June 2018, the U.S. Supreme Court ruled that states can force large online retailers to collect sales tax from customers, even if the retailer does not have a physical presence in that state. Do you think sales tax should be collected on Internet purchases? Why or why not? What are the positive and negative implications of collecting sales tax on Internet purchases?

Answer 1

Although this forms part of the subjective opinion but the supreme court ruling on the imposition of sales tax on internet purchases have major implications for affecting the economy and it can safely be said that sales tax should be collected on internet purchases. First of all, it seems that the local businesses finally feel balanced in the competition side now that the online stores won't be able to attract customers by their extremely attractive low prices and offers as much as they were able to do before. So it gives them hope to make sales on the non online side as well boosting the local economy.
Secondly, this may actually also affect the government revenues. We all know that online shopping has emerged a big source of business in today's times. By keeping this area tax free and losing out on revenue boosting does not seem plausible as this increase in revenue could help the present government to follow its development of improving infrastructure facilities, Research and development, health care and much more.

Positive implication of sales tax collection includes:
1) Boosting the local retail businesses and helping them become economically competitive reducing the online retailers' advantage by introducing online sales tax.
2) Collection of sales tax on such a huge and emerging area of business could really boost the government revenue and help it carry out its functions smoothly/

Negative implication includes:
1) Troublesome procedure and unclarity: As the online retailers work almost in a virtual space, it is very difficult for government to pin down on whom to impose tax as their location is not specified. Surely, it is going to be quite time consuming.
2) Against the free market spirit of US: Although this rulings may help the local businesses, but it is also going to affect the consumers on the negative side as the sales tax would increase the price of goods. Also, the imposition of sales tax, the online retailers would lose their advantage and affect their revenue which in turn could also affect the growth process in America.