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On taxation of online sales

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On taxation of online sales Jan Babiuch-Hall John Barret Owen Barton Caroline Dobyns Reasons for an internet sales tax: The lack of an internet sales tax creates an ... – PowerPoint PPT presentation

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Title: On taxation of online sales


1
On taxation of online sales
  • Jan Babiuch-Hall
  • John Barret
  • Owen Barton
  • Caroline Dobyns

2
Reasons for an internet sales tax
  • The lack of an internet sales tax creates an
    unfair competitive advantage for online
    businesses.
  • Local businesses become showrooms for online
    businesses.
  • Lower sales for local businesses means fewer jobs
    in the community.
  • Local businesses often provide other benefits to
    the community besides selling a product or
    service.
  • The state where the customer resides should tax
    the purchase as this is the fairest way to
    distribute tax revenue.

3
Reasons for an internet sales tax
  • When you aren't able to collect sales tax from
    online sales shipped into your state, everyone
    who pays sales tax in your state will pay a
    little bit more than they otherwise would have.
  • State and local government will have to raise
    revenue in other ways, by increasing income or
    property taxes, or by cutting spending.
  • State governments are losing more than 7 billion
    a year because online purchases don't get taxed.
  • Each year about 10 billion in tax on Internet
    sales go uncollected.
  • Tax-free Internet shopping shifts more of the
    sales-tax burden to those who can least afford it.

4
Reasons against an internet sales tax
  • Having online purchases be tax-free creates an
    incentive to purchase online, which is desirable
    because online stores are more efficient.
  • The issue of which state collects the tax is
    moot.
  • Instituting a tax on online sales creates a legal
    hurdle for entrepreneurs wishing to start an
    online business.
  • The benefits of tax-free online sales are
    available to all customers

5
Reasons against an internet sales tax
  • Since online shopping is subject to shipping
    costs, adding a sales tax could make online sales
    unprofitable and hurt the online sales industry.
  • Enforcing online sales taxes is unduly
    burdensome.
  • Online shopping has a global market situations
    would arise where it is unclear of how to apply
    the tax for international sales.
  • A sales tax dependent on what state the item is
    shipped to introduces a high risk of sales tax
    evasion.
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