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Taxes in an e-commerce generation

Author

Listed:
  • David R. Agrawal

    () (University of Kentucky
    CESifo)

  • William F. Fox

    () (University of Tennessee)

Abstract

Abstract Rapid growth in e-commerce has altered the ability of jurisdictions to enforce commodity taxes on a destination basis. This results in different effective tax rates depending on the way in which goods and services are purchased and the characteristics of both the products and the sellers. We discuss the arguments for the destination principle as the appropriate place-of-taxation rule for consumption taxation of cross-border trade. We analyze various recent reforms to the value-added tax in the European Union in response to e-commerce. We then examine various policy options in the USA—maintaining the status quo, changing nexus rules, states adopting information reporting, and national reforms that require firms to remit taxes regardless of physical presence—and relate them to the recent European reforms. We conclude based on our analysis and the recent European Union experience that reforms at the national level appear to be the important next step to enforcing commodity taxes at destination in the USA.

Suggested Citation

  • David R. Agrawal & William F. Fox, 2017. "Taxes in an e-commerce generation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(5), pages 903-926, September.
  • Handle: RePEc:kap:itaxpf:v:24:y:2017:i:5:d:10.1007_s10797-016-9422-3
    DOI: 10.1007/s10797-016-9422-3
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    References listed on IDEAS

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    Cited by:

    1. Hans Jarle Kind & Marko Köthenbürger, 2016. "Taxation in Digital Media Markets," CESifo Working Paper Series 6202, CESifo Group Munich.

    More about this item

    Keywords

    Destination taxation; Origin taxation; Commodity taxes; Online shopping; E-commerce; Tax competition; Digital products;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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