E-commerce Taxation Issues: A Balanced Perspective and Options for Resolution

Abstract

This chapter is designed to give the reader a balanced perspective on some of the issues surrounding the current discussions related to state and local taxation of Internet access fees and sales transactions on the Internet. It will attempt to describe the issues being discussed and present several viewpoints from interest groups on both sides of the issue. This chapter is being written at an interesting time since the proponents of Internet taxation are searching for technological as well as administrative ways to met their goal. The Advisory Commission on Electronic Commerce released its final recommendations to Congress in April 2000, after its four in-person meetings in Williamsburg, Virginia; New York City, New York; San Francisco, California; and Dallas, Texas. Taxation of Internet access and transactions on the Internet is one of the most complicated public policy issues of our time, affecting over 30,000 state and local taxing jurisdictions and literally thousands of businesses and customers worldwide. The proposal receiving the majority vote of the commissioners is based on the conclusion that existing, internationally accepted tax rules should be applied to e-commerce with no new taxes being levied and with an emphasis on simplification, neutrality, greater certainty and avoidance of double taxation. This chapter will develop a next-steps strategy to be considered by policy makers.