Internet Sales Tax- Should There Be One or Not?
Internet Sales Tax- Should There Be One or Not?
No one can argue the fact that the current age belongs to the internet with people across the globe using the worldwide web for multiple activities including shopping. Indeed, statistics show that the number of people shopping online nowadays is increasing steadily. Consumers seem to prefer buying things online for several reasons- they can buy sitting in the comfort of their homes, browse through several online shops with just a click of the mouse and compare prices at several stores without hopping, skipping and jumping from shop to shop. Another big reason why customers like online shopping is because, at least as of now, very few of the online shops charge sales tax (Mott, n.d.). This means that prices of goods in the online stores are much lower than those in a traditional retail outlet- an attraction that is too good to resist in these economically hard-pressed times.
However, going by last year’s developments in the government pertaining to the internet sales tax i.e. sales tax collected from consumers whenever they purchase goods online, it appears as if the days of tax-free online shopping are numbered. Not surprisingly, the government developments with respect to the internet sales tax evoked a mixed-bag of opinions from consumers as well as retailers, which brings forth a very pertinent question on the subject- should there be internet sales tax or should it be done away with? While it is true that the issue of internet sales tax has its fair share of opponents and proponents, considering the bigger picture, it would not be inappropriate to state that the internet sales tax should be collected from the consumers.
As such, the concept of sales tax has existed since long and there is probably no shopper today who has not paid sales tax for purchasing things from a regular retail store. States and local governments have long since established a definitive taxation system not only pertaining to sale of goods, but also with respect to income and property which administrations charge in order to generate revenue for maintaining common urban infrastructure and services such as roads, schools, utilities etc. But if today, people choose to shop online, if only to avoid the sales tax, how are the governments to generate this revenue?
Opponents of the internet sales tax argue that the economy today is already tough and in this scenario the introduction of sales tax on online shopping, instead of boosting sales, would only push it down, thus deteriorating the fragile economy further. Those opposing the internet sales tax opine that charging it would discourage people from spending and put small-time traders out of business in favor of their bigger counterparts (Mott, n.d.).
On the other hand, the proponents of the internet sales tax say that if people want to enjoy the common urban amenities, they must first provide revenue to the governments to generate them by paying sales tax not only on offline purchases, but on online ones too. This becomes all the more important when considering that the number of online shoppers these days is well on its way to outnumbering those shopping at regular stores. Advocates of the internet sales tax also reason that levying the tax on all internet purchases would make things fairer in commerce by putting the online and retail stores on the same platform. This way economic activity between online and the brick-and-mortar shops will remain undistorted that will contribute to improving the overall economic efficiency (Mott, n.d.).
One big difficulty in the implementation of the internet sales tax arises during cross-border purchases, which are a common occurrence in internet shopping. Should the sales tax be paid to the government where the buyer lives or should it be collected at the time of sale? It is important that such crucial questions be addressed and answered before the internet sales tax is introduced in e-commerce (Mott, n.d.). Even so, in today’s internet age where geographical barriers are fast vanishing, it should not be difficult to put in place a simple out-of-state sales taxation system that would cause no cost burden for the seller.
The bottom-line is that the question whether there should be internet sales tax or not is quite complicated. While on the one hand governments fear that their revenues may go down unless the tax is levied, consumers are afraid that they will be forced to squeeze out a little more of their meager incomes as internet sales tax. No doubt, each party is right in its own place, but a better bet for both the factions would be to have an internet sales taxation system that does not fleece the people and yet provides enough money to the governments to run their areas of jurisdiction efficiently. This way everyone would be made happy- the governments, the business people, both online and offline ones, and the consumers and this in turn would contribute to strengthening the economy.
References
Mott, J. (n.d.). Should there be sales tax on internet purchases? Retrieved from http://www.thisnation.com/question/007.html
