Sales Taxes

Levying Sales Taxes on

Internet Shopping

November 7 , 2007

Abstract

The burning question that persists is whether online shopping will remain sales-tax free or not . While shoppers are happy about this , some oppositionists have surfaced seeking to displace a Supreme Court ruling on no-tax to online shopping . As the Court suggests a complex task taxing the online shoppers would create more problems and some unintended effects that run smack at interstate commercial laws Despite all odds , online shopping has been projected to remain unabated-- with or without the levied

sales taxes

When someone buys a particular product or service , a certain tax is imposed on . The levied tax on goods or services is called consumption tax or sales tax . Since the type of taxation is based on consumption it follows that consumers would only pay taxes on what goods or services they finally consume or use to provide utility .1 Various names have been applied to consumption tax like expenditure tax , consumed-income tax etc . among others

Basis of Taxation

Generally , taxes are imposed on people or businesses and paid to the

government for public purposes such as maintaining roads and highways building schools , paying teachers , etc . Taxes may be direct or indirect , and have come from income , property , or sales . And so the names : income tax , property tax , and sales tax . Some forms of taxation however , prove to be a strain , which literally taxes one 's patience while giving somebody a headache or difficult mental tasks involving loads of work

Undeniably , an increasing large number of shoppers particularly the American consumers have been observed buying online more and more goods and services from the comfort of their homes . These shoppers prefer to browse catalogues , pick , and then simply buy the chosen tax-free items online . As a matter of fact , consumers online are attracted shopping for the basic reason that only few internet stores ' collect sales taxes from the consumers , which makes online products cheaper than traditional stores

To Collect Sales Tax or Not

A news agency has quoted Senator Michael Enzi (R-Wyoming , pointing the loss to sales taxes due to the increasing use of internet for consumer purchases . Internet 's billion-dollar taxes could otherwise add up to what local and state governments ' need .2 With these needs , it becomes imperative planning ahead in putting a workable taxation system . And to generate revenues , various taxation schemes have come to the fore or else the local governments and states end up scurrying for new revenues or resort to further belt tightening . If sales tax revenues are not collected , there would be a serious disruption in the local and state governments programs . A fiscal crisis is likely to occur . For this matter , both state and local governments must find alternative ways of raising revenues or ways of cutting some spending

Currently , some opposing arguments have surfaced on taxing internet shoppers for online purchases . In his report on internet purchases Lawrence Reed reiterates the question on the applicability of sales and use taxes on...