In 300 words. The long standing debate over internet sales tax is rooted in the
ID: 413699 • Letter: I
Question
In 300 words. The long standing debate over internet sales tax is rooted in the case of National Bellas Hess, Inc. v. Department of Revenue of the State of Illinois (1967) in which the U. S. Supreme Court ruled that states could not compel a mail order firm to collect use taxes if the firm had no taxable nexus in the state. A commonly used example in many states is Amazon. Congress approved a moratorium on internet sales tax in 1998 and since renewed it through 2014. Now that the moratorium is expired and based on the readings in chapter 4, discuss how this decision impacts both the consumer and the local governments ability to generate taxable revenue. Does this have a positive or negative impact on the community including funding for public safety services or does the tax stifle the growth of internet based retail technology and adversely impact consumers?
Explanation / Answer
The debate regarding internet sales tax started long back and there was a lot of confusion regarding the same. In 1998 the then president Bill Clinton enacted The Internet Tax Freedom Act in order o promote the internet and its educational and informative aspects. The law stated that neither the local government nor the federal government will impose any tax in internet access, even the ecommerce was free of getting charged with multiple tax. The State also cannot charge any tax on ecommerce retail done online and here the problem started because ecommerce is the next big thing and not taxing them made the situation worse because if there is a physical presence of the retailer then taxes will be there.
The moratorium expired on 2014 and this will mean that the online retail is no more tax free and sales tax will be levied on each and every product they sell which will make them rise the price of the products and the consumers will be affected to quite an extent. The local or state government will be able to tax the ecommerce transactions now which may seem ok but may have a negative impact on the market as people will be affected. Funding for Public safety service may also have a setback as they will be charged with a percentage of their earnings as tax to the government and as mentioned this may adversely impact the internet based retail technology and also the consumers. If we think about it practically then we will observe that paying sales tax for any product sold is a duty and it is the right of the government to collect the sales tax from the organization, therefore this should not affect the business of the organization and they should plan accordingly as everybody doing business is entitled to give tax to the government. This should not be confused with internet access because the access will not be a taxed facility and the public safety services funding should not be negatively impacted.