Sales tax
Often laws provide for the exemption of certain goods or services from sales and use tax, such as food, education, and medicines.
Norway, Denmark and Sweden have higher VATs at 25%, Hungary has the highest at 27%[12][13] although reduced rates are used in some cases, as for groceries, art, books and newspapers.
Generally, there are four types of electronic commerce: intermediaries, retail, business-to-business and media, all of which are affected by consumer response to sales tax.
However, while consumers are technically supposed to pay a sales tax when it comes to cross state border transactions, the practicality of enforcing it is impossible.
While some researchers have concluded a high elasticity of online purchase probability with respect to sales tax at around 2.3, others have found smaller figures of around 0.5.
However, it has been suggested that any regressive effect of a sales tax could be mitigated, e.g., by excluding rent, or by exempting "necessary" items, such as food, clothing and medicines.
[25] As e-commerce sales have grown in recent years, noncompliance with use tax has had a growing impact on state revenues.
The Congressional Budget Office estimated that uncollected use taxes on remote sales in 2003 could be as high as $20.4 billion.
[25] This limitation was defined as part of the Dormant Commerce Clause by the Supreme Court in the 1967 decision on National Bellas Hess v. Illinois.
[26] A number of observers and commentators have argued, so far unsuccessfully, for a Congressional adoption of this physical presence nexus test.
In a report issued in 2003, the Congressional Budget Office warned of the economic burden of a "multiplicity of tax systems, particularly for smaller firms".
Cooperative efforts in this project by 44 state governments and the District of Columbia eventually produced the Streamlined Sales and Use Tax Agreement in 2010.
The intermediaries were affected by the retail sales tax since it provides platforms for transitions between different parties (such as the Amazon marketplace).
[31] A tax imposed on the sale of goods is depicted on the walls of Egyptians tombs, which have been dated as far back as 2000 BC.
[33] Nearby Athens collected duties on the import and export of commodities, recorded at a rate of two percent in 399 BC.
[34] The Roman emperor Augustus collected funds for his military aerarium in AD 6 with a one percent general sales tax, known as the centesima rerum venalium (hundredth of the value of everything sold).
[35] The Roman sales tax was later reduced to a half percent (ducentesima) by Tiberius, then abolished completely by Caligula.
Five states currently do not have general sales taxes: Alaska, Delaware, Montana, New Hampshire, and Oregon.
[32] The 2010 health care reform law imposed a 10 percent federal sales tax on indoor tanning services, effective July 1, 2010.
[37][38] Canada uses a value-added federal Goods and Services Tax with a rate of 5 percent, effective since January 1, 2008.
