Internet tax losses anyone's guess

From...

by James Evans

(IDG) -- Figuring the total for lost taxes from Internet sales is a murky science, according to a government report released Monday.

The report from the U.S. General Accounting Office concluded that states and localities may be losing anywhere from $300 million to $3.8 billion in 2000. The new study is part of an ongoing effort to assess the merits and drawbacks of taxing Internet transactions as lawmakers debate the issue on Capitol Hill.

MORE COMPUTING INTELLIGENCE

IDG.net home page

Civic.com home page

Get a free subscription to Civic.com's print edition

Tax-free Internet? Don't count on it

House extends Internet tax ban

Reviews & in-depth info at IDG.net

E-BusinessWorld

TechInformer

Questions about computers? Let IDG.net's editors help you

Subscribe to IDG.net's free daily newsletters

Search IDG.net in 12 languages

News Radio

Fusion audio primers

Computerworld Minute

"There is a whole bunch of parameters that you have to have to come up with a precise number," said James R. White, the GAO's director of tax policy and administration.

For that reason, GAO officials developed a lower and a higher scenario for what is being lost in Internet sales tax, White said. He added that officials took into account estimates of Net sales, tax-exempt products and users, and different taxing rates.

According to the higher estimate, about 2 percent of overall state and local sales taxes would not be captured, or roughly $3.8 billion in 2000. The lower scenario came in at $300 million.

White said the GAO also forecast the potential losses in 2003. Because the Internet is so dynamic right now, such projections get even more clouded.

The high scenario for 2003 is that state and local governments could fail to capture $12.4 billion in taxes, while the low scenario is $1 billion, White said.

The Internet poses new challenges for taxation, such as determining the place of purchase for a product bought online, White said. That situation makes it difficult to decide how much a product should be taxed.

Sen. George Voinovich (R-Ohio) requested the Internet taxation study. Voinovich is a proponent of taxing Net commerce.

U.S. government moves to electronic transactions
July 25, 2000
Legislators debate proposals for e-commerce taxes
July 12, 2000
Booming Internet economy crushing local communities
July 10, 2000
Campaign 2000 and e-commerce
June 15, 2000
Numbers show reality of e-sales
March 6, 2000

IRS satisfies online taxpayers
(FCW)
Tax-free Internet? Don't count on it
(PC World)
House OKs new Net-tax moratorium
(Computerworld)
GAO begs Hill for money
(FCW)
EU likely to impose taxes on digital deliveries
(IDG.net)
GAO report: Tax dollars lost on Net unclear
(IDG.net)
GAO wants greater oversight of online brokerages
(The Industry Standard)
Tax panel agrees they can't agree
(The Industry Standard)

U.S. General Accounting Office

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.