Taxation

Student’s name
Professor
Course
Date
E-commerce Taxation
Where do you stand on taxation of e-Commerce?
I support the taxation of e-commerce. The state has a right to tax any sector to help raise revenue to fund important government activities. E-commerce generates huge revenue from online sales and other commercial operations. As such, it is appropriate that some form of taxation be levied on e-commerce. The tax should be uniform on all e-commerce activities, collected electronically and the proceeds remitted to the federal government.
What are the benefits of tax-free internet zones for online businesses?
Internet tax-free zones have numerous benefits for online businesses. Tax-free zones encourage business growth since it lowers the operational costs. Low operation costs are desirable mostly to small businesses as it increases revenues thus allowing them to expand (Nellen 6). Additionally, tax-free zones enable the prices of products sold online to be competitive with those sold in brick-and-mortar stores. They also attract foreign direct investment.
What are the detriments of tax-free internet zones for state and local taxing authorities?
Despite their numerous benefits, tax-free internet zones can deny the state and local taxing authorities vital revenues from tax collections. Since most businesses are transitioning to e-commerce with the sector registering swelling numbers every year, internet free zones lead to loss of tax revenues from such businesses. Revenues to fund critical government operations is thus substantially reduced.

Additionally, tax-free internet zones also encourage tax evasion as most brick-and-mortar stores start selling their products online to avoid taxes (Nellen 8).
Is it possible for state and local taxing authorities to accurately account for (i.e., levy and collect) taxes paid on e-commerce transactions?
Taxing e-commerce transactions can be very challenging due to the various tax issues that come with e-commerce. Establishing a nexus of operation for businesses operating online can be difficult due to the ambiguity of their locations. As such, it may not be clear which local taxing authority or state has the jurisdiction to levy and collect the tax. Additionally, e-commerce enables for the sale of some products like books in intangible form (digitized) thus raising issues as to whether sales tax apply and the point of income generation (Nellen 8). Administrative concerns are also raised due to the possible use of digital currency and paperless transactions in e-commerce.

Work Cited
Nellen, Annette. “Overview of Internet taxation issues.” Bloomberg BNA Internet Law Resource Center (2012).