The European Union currently collects a value-added tax (VAT) that applies only to the purchases made by European Union residents from European Union online retailers. Any items purchased online from sources outside the European Union are non-taxed. This leads to loss of revenue by the business sector of the European Union and loss of tax revenue by the states of the European Union. However, purchases made from European Union businesses by U.S. consumers add greatly to the economies of those European Union states. So the question ar

A blanket tax exemption for e-commerce. Top choice of Web retailers and free-marketers

One issue that stands out in this debate is just how to implement a fair system of taxation that could be controlled at the local level without forcing businesses to other states. 'Under the new system, every business with a mail-order or Internet division would be forced to become a tax collector for every state and local government in the nation. For example, if a resident of New York City buys a product from Virginia, the business in Virginia would be required to collect and remit sales taxes for both the state and city of New York. The logical question, of course, is why states would want to create such a complicated and bureaucratic system. If they truly are concerned that these types of cross-border sales are tax-free and that this creates an unfair advantage over traditional "bricks-and-mortar" companies, why not simply have Virginia impose its sales tax on the transaction. This would be perfectly consistent with the way other products are sold. After all, if a New Yorker visits a store in Tysons Corner, Va., and makes a purchase, he will pay the Virginia sales tax' (Mitchell, 2). The major downfall to this would be that companies would chose to move to locations where the tax rates were lower in an attempt to entice more customers.

ises if it would be more profitable to have American dollars flowing in to the European Union economy through the increased tax-free purchases or take a chance on losing U.S. consumers by attempting to increase revenues through taxation of those sales.

Returning to the home front, debate flows in much the same manner. Our economy has undeniably been stimulated by the tremendous growth of the technology industry. The profits from computer hardware and software sales are the tip of the iceberg. Residual sales for service oriented business such as internet service providers, technical support services and on-line marketing are a much greater source of profit. The average computer owner also has internet service which in most instances will cost between $20.00 and $40.00 per month. This service alone can generate as much or more than $480.00 per year for a single household. Having seen this rising trend in untaxed sales, the government as well as brick and mortar business have begun to take a serious look at the potential losses from e-commerce.

These issues may seem distant and irrelevant to our c

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