IP: Re: EU to impose VAT on digital goods and software, from WSJ

[Dave Farber <farber () cis upenn edu>]

Amen


> To: farber () cis upenn edu
> Subject: Re: IP: EU to impose VAT on digital goods and software, from WSJ
> Date: Thu, 02 Mar 2000 14:53:54 -0500
> From: Craig Partridge <craig () bbn com>
>
>
>
>     [I'd be happy to forward other views. Anyone wanna defend this? djf]
>
> Hi Dave:
>
> I can't defend the EU idea but have a comment on it that may be useful.
>
> The thing about most of the Internet sales tax/VAT proposals is that they
> ignore a key feature of the Internet, namely that it tends to ignore
> boundaries.  As Ron points out, people in the EU can buy electronic goods
> easily from anywhere in the world.  And the place they buy may have
> no affiliation with the EU.
>
> Furthermore, buyers are mobile and often semi-anonymous (esp. when purchasing
> electronic goods -- tangible goods still have to be delivered somewhere).
> Buyers will be fully anonymous if e-cash ever becomes popular.
>
> Trying to impose local sales tax on buyers who are mobile and semi-anonymous
> and buying outside your jurisdiction is a challenging proposition.  (Though
> people try -- I just moved to Michigan and their tax returns have
> a line for sales tax on mail-order/Internet purchases, with a firm statement
> that if you don't know how much you spent on such purchases, you should
> use the following percentage of your gross income -- effectively this is
> an addition to your income tax to cover sales tax shortfall rather than
> a sales tax but is close).
>
> My take is that the best hope of effectively collecting sales taxes is to
> have the seller charge taxes, using the sales tax applicable in the *seller's*
> location.  Of course, that solution is unpopular because it gives an ecommerce
> advantage to merchants in low tax countries.  (And yes, I said countries --
> I think regional taxes just don't work in this scenario -- the temptation
> for an e-merchant to relocate to an adjacent county or state if sales taxes
> are lower is just too great).
>
> Craig