Internet Taxation and the Expansion of E-Commerce Essay

1945 Words 8 Pages
Internet Taxation and the Expansion of E-Commerce

Internet taxation is an issue concerning different aspects of the Internet and its taxing. The taxes include: (1) taxes imposed upon Internet access fees, (2) sales taxes charged to online businesses selling to other businesses, and (3) sales taxes charged to consumers buying from a business. This is a very important issue as Internet sales continue to increase and as more business is conducted over the Internet. Because of this, revenue is not being pumped into state and local economies as much for lack of purchasing at local stores, and economies’ revenues are suffering as a result. Taxes could be imposed on Internet purchases, but this would in turn affect those businesses who
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Internet access service is “a service that enables users to access content, information, electronic mail, or other services offered over the Internet.” (The Internet Tax Freedom Act, Mar. 8, 2005, http://www.ecommercecommission.org/ ITFA.htm) Internet access services are only a part of telecommunications services, which also deals with telephones, radio, etc.

E-commerce has been expanding very rapidly in the past few years, and that is why Internet taxation has become such a pressing issue. Congress also passed in 1998 state and local taxes on Internet access. A tax on Internet access is simply a charge (usually monthly) for the right to access the Internet via phone lines, cable lines, satellite, etc. What Congress did not do is require state and local governments to tax sales over the Internet. It is very tricky, but there has not been a solution to this problem because Congress has yet to completely and thoroughly address it. The problem is that taxes are not being paid because there is no legislation for sales taxes over the Internet. Much of the income obtained from these sales taxes are used for state and local expenditures such as police and fire protection, road maintenance, education, and etc. Without them, state economies are losing money.

The problem still goes further than
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