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TO TAX OR NOT TO TAX? THE CASE OF ELECTRONIC COMMERCE
Author(s) -
Bruce Donald,
Fox William,
Murray Matthew
Publication year - 2003
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1093/cep/21.1.25
Subject(s) - context (archaeology) , value added tax , public economics , tax credit , economics , business , indirect tax , the internet , goods and services , ad valorem tax , tax reform , double taxation , microeconomics , commerce , market economy , paleontology , world wide web , computer science , biology
Despite the intensifying debate over the taxation of Internet commerce, the relevant issues have not been given a systematic treatment in the context of the literature on optimal taxation. This article presents such an analysis and investigates separately the taxation of business purchases of intermediate goods, the taxation of consumer purchases of final goods and services, and the various issues of administration and compliance costs as they apply to the development of E‐commerce. The authors conclude that generally the optimal tax literature cannot be used in support of a blanket tax exemption for Internet purchases. Certain conditions could lead to the optimality of an exemption, but those conditions are not likely to be met in practice.