Pros and Cons of the Internet Tax

Pros and Cons of the Internet Tax

Introduction

Since its inception, the internet till the late 1990s, internet did not have any sort of regulation in the United States of America. At the same time, it was also free from duties, taxes, import, license fee etc. This trend started to change by the year 1966, when some of the states of the United States of America perceived internet as one of the potential sources to levy taxes. However, in the year 1998, the Internet Tax Freedom Act ceased the direct taxation over the internet. As a matter of fact, the proposition of this particular legislation has coincided with the proliferation of the internet. Most of the people opined the benefits that this technology has brought about such as knowledge, trade, communication etc, has surpasses the losses, which otherwise could have been obtained through levying these taxes (Moore, 2012).

It is evident that the direct taxes over the internet are not present; however, this does not mean that the transactions that take place over this medium are free from taxes. However, in the US, all of the internet transactions are subject to one kind of tax or another. By considering all this, this paper focuses on the notion of internet tax, its brief history, mechanism and more important its pros and cons. However, the benefits of the internet, by and large, are more than the revenues that could have been achieve by levying taxes.

Discussion

As a matter of fact, there are many forms of internet taxation, such as, internet access tax, telecommunication tax, bit tax, and the bandwidth tax. All of these forms collectively form the notion of internet tax (Lukas, 2012). Following is the brief discussion on these forms:

Internet Access Tax

Internet access tax is usually the kind of taxation on the internet service provider (ISP). As a matter of fact, the ISPs charge this tax on the subscribers or the users of internet service. However, this tax, in some of the states, falls under the umbrella of sales tax. This tax is currently levied on the state level, and there is no such national mechanism that engulf each and ever y state under the tax net in terms of internet.

Telecommunication TaxIn some of the states, such as those of Wisconsin and Tennessee, treat the charges pertaining to internet as the telecommunication taxes. However, there are several approaches to access the internet in these particular states such as DSL, cable internet, wireless, landline phone, ISDN, satellite etc. and each of these forms are treated in a specific manner and also have different taxation rates. In fact, there are diversified views regarding the imposition of taxes on these particular domains, and the concerns has been raised from many of the quarters as in these taxes are aimed at benefiting certain groups.

Bit Tax

In many of the countries there are specific mechanisms to charge taxation on the usage of internet, and that is done through levy of charges over the ...