Internet Purchases Taxation—Is it Good or Bad? Essay Example

tax base and consequently affect government finance. However, the forecasts were overstated for it included other forms of sales other than business-to-consumer sales. As indicated in the analysis of Austan Goolsbee and Jonathan Zittrain, of University of Chicago and Harvard Law School respectively, the total revenue loss nationwide in 2007 was even less than two percent of the sales tax collected (Reed, 2000, p. 8).

Hence the loss in sales tax revenue is at an insignificant amount and therefore does not affect government funding. Another reason for putting taxes on Internet purchases is to eliminate or at least regulate the unfair advantage of on-line sellers from brick-and-mortar operators, if such advantage really exists.

In 1999, Gov. William Janklow in an interview at Online NewsHour said that by being fair they [the government] meant that anyone doing business, in any form, should give fair share of tax and not be happily trapped in a safe ground.

In spite of this remarks, it should be regarded that E-commerce is but a tiny portion of the retailing sales and commonly exists as an intangible counterpart of the brick-and-mortar firms, and thus, does not impose serious danger to these firms. The third argument for taxing goods bought on-line concerns that the poor population, who are non-users of Internet services, might end up paying the taxes needed to make up for unsolicited on-line sales tax.

Then again, calculations in Goolsbee shows that for the internet-using population, only one out of five actually purchases items on-line and the unwillingness was believed to be due to the lack of confidence on the security of on-line transactions (1999, p. 13)

Despite the eagerness to devise a system for computing and collecting sales tax for purchases made over the Internet, a definite approach to manage these taxes is rarely installed, especially for personal small-scale purchases.

This is because such system is costly, tedious and complex.

As for now, the state government can only rely on the hope that these purchasers will file their tax willingly. More recently, the Internet Tax Freedom Act (ITFA), originally enacted in 1998, was extended before it expired in November of 2007. It is somehow puzzling why the House of Representatives merely passed an extension instead of making the tax moratorium permanent. This issue, however, does not have a direct connection with the issue on Internet purchases since ITFA is concerned with preventing new taxes for Internet access.

Simply, this is just to emphasize the special interest of policy-makers on the potential of a fast growing independent technology.

Upon stating and assessing the costs and benefits of taxing Internet purchases, it can safely be said that all parties wants E-commerce to lead economy nowhere else but forward. Whatever resolution is agreed upon, it is the task of a citizen of the state to ensure that these are made for the benefit of the many and are free from traces of hidden political motives.

References

McQuivey, J., Delhagen, K. , Levin, K.

Kadison, M. LT. (1998). Retails Growth Spiral.

The Forrester Report, 8. Goolsbee, Austan & Zittrain, Jonathan. (1999). Evaluating the costs and benefits of taxing internet commerce, 5, 9-13. Retrieved January 16, 2008 from webadd Mackinac Center for Public Policy. (2000, March).

To tax or not to tax,

here are the questions, Retrieved January 16, 2008, from webadd Spratt, Tracy L. (2000, October 1). Taxing internet purchases—the pros and cons. Leader’s Edge, 2.

Retrieved January 17, 2008 from webadd