Taxes should not be charged on online sales. The law requires customers to pay sales taxes for goods that they purchase in stores that have a physical presence. Charging online sales taxes will discourage customers from purchasing goods online. This will have a negative impact on online businesses due to a rapid decline on sales. Online businesses lack physical presence, which makes it unfair to charge sales taxes to customers. Some business people may tend to exploit clients with taxes as customers lack adequate knowledge on tax rates (Einav 25). The online shopping-cart software services used in handling online taxes may be programmed differently, which will bring a disparity in the tax system.
Online sales taxes would be paid to e-commerce traders. The government could then collect the sales tax from online retailers, which would contribute to additional revenue for the economy. Charging online taxes would transfer additional costs to the online sellers and the consumers. This is because they would have to cater for the associated collection, accounting, and distribution costs. These expenses would be covered in the price of the items. Sellers would increase the prices to cater for the costs; this results in decreased sales as customers will opt for cheaper substitutes.
There would be no benefits for customers or companies that pay tax on online sales. The retailers would be forced to comply with the administrative procedures and legal costs, and this would affect their businesses negatively (Mantel 35). There is decreased revenue when sales taxes are introduced to online items; online goods are usually 10% cheaper than in physical stores, which attract customers (Lenard, Thomas, and Stephen 12). Introduction of sales taxes will make them expensive forcing customers to prefer physical stores.
Sales taxes on online items are unnecessary as it affects the retailers and customers negatively. The taxes have additional costs to online sellers and consumers; they are forced to cater for the collection, accounting, and distribution costs. Customers will be affected negatively by sales taxes on online items due to increased prices and legal formalities in purchasing items.
Works Cited
Einav, Liran. Sales Taxes and Internet Commerce. Cambridge, Mass: National Bureau of Economic Research, 2012. Internet resource.
Lenard, Thomas M, and Stephen McGonegal. Taxation of Online Sales: Competing with the Streamlined Sales Tax Project. Washington, D.C: Progress & Freedom Foundation, 2004. Internet resource.
Mantel, Barbara. Internet Shopping: Should States Require Online Retailers to Collect Sales Taxes? 2013. Print.
