Why shouldn’t we collect internet taxes from online retailers? After all, collecting those taxes means raking in at least $23 billion that we were losing before. And imagine what those $23 billion can go towards? Regardless of how much money the government could gain from collecting internet taxes, there are more cons than there are pros.
First off, the act of imposing the collection of internet taxes will only cause for retailers to lose customers. Though there are online retailers that are required to now collect sales taxes from their customers, there are even more that don’t. For that reason, if a consumer goes to a certain website and find that they need to pay sales tax, then they can simply leave the website, go to different retailer who doesn’t charge sales tax, and make their purchase there.
The reason above ties in with this – if a company sales go down, so do their stocks. The act of collecting sales tax will cause for customers to either make their purchases elsewhere or buy less from you. Amazon for example: Amazon shoppers have to pay sales tax and the larger their purchase, the higher the sales tax. Studies shows that after this act was imposed, buyers who once did most if not all their shopping online, shopped less – choosing to buy their merchandise elsewhere which causes the firm to be in harm more than anyone else.
Even with collecting internet taxes, there are still loopholes that consumers can find to avoid paying sales taxes. It makes you think, “Then really, what is the purpose of the act of collecting taxes?” Companies lose customers, drop sales, and their stock prices go down. After doing all this research, there has yet to be any findings that highlight or specify why collecting sales taxes from online retailers to be so useful.