Communication in Economics - Essay Example

The internet has become the ultimate opportunity for people World round the world to build business and self-employee themselves and generate economic activity that benefits the world economy. It is a self-regulated virtual location which no country can control or impose local restrictions associated with typical economic trade such as the one imposed by the World Trade Organization and the United Nations. Ecommerce generated in 2006 $104 billion in retail sales (Plunkett Research, 2008). Some state and city governments are placing sales tax on good purchased in by internet and there new governmental entities such as the City of Tucson City Council trying to impose similar sales imposition to raised their revenues.

This paper provides an analysis of the pros and cons on the internet sales tax controversy.The government always wants to get their hands in any revenue generating scheme at any cost. The base by which critics refuse to recognize the right of a city such as Tucson to impose city tax sales is that most of the transactions are occurring outside their regional jurisdiction. If an online store is located in Toronto, Canada how does a government official justify that they have the right of collecting a sales tax from a Tucson citizen for purchasing good from that store.

It is an outrageous claim by these city officials that such a transaction is legitimate. That is the as saying that a resident that goes to Canada on a tourism leisure trip should pay taxes to the cities on the purchase they make during their vacation. The timing and precise location of where the transaction took place is also an argument against the bureaucrats illogical idea. If the resident of Tucson goes outside the city borders with their laptop and makes a purchase in an online store in a different city there is not way that Tucson would be eligible for a sales tax since the person was not in Tucson when the purchase was made.

Their sales taxing system if approved would attempt and successful collect the tax due to the shipping address in Tucson which since the information taxing system does not differentiate between transactions since it is impossible to know where the actual took place when dealing with a virtual transaction. Governmental officials and lobbyist for taxing internet sales have a different perspective on the issue. To them not taxing internet sales is a discriminatory move against local merchants which are obligated to charge people sales tax, a move which raises the price of the items purchased.

The merchants with physical location have a competitive disadvantage against online merchants in terms of the price final price they can provide to their customers due to the sales tax imposition and other variables such as having higher overhead cost of renting space and being obligated to hiring more employees to run their physical operations. This argument might be a little vague. The reality is that eCommerce does not yet represent much of a threat to regular merchants since as of 2006 online retail sales represent only 2.

3% of the total retail sales in the United States of America (Plunkett Research, 2008). The internet represents a medium that has enriched the lives of people around world as well as providing a new way of doing business for humans. The government wants to get a piece of the pie by charged sales taxes on sales, but their desires are selfish since the internet is solving a lot of employment problems by creating new jobs which the government without the assistance of governmental incentives. The better prices smart online consumers are able to obtain is improving the standard of living of American citizens.

The best thing the Mayor of Tucson can do is veto the sales tax proposal if it ever reaches get to his hand for approval. ReferencesPlunkett Research (2008). Ecommerce Statistics. Retrieved January 30, 2008 from Plunkett Research database.