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Internet Policy and Economics pp 141–150Cite as

Implications of Electronic Commerce for Fiscal Policy

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Abstract

In this chapter, I will consider both sides of the relationship between electronic commerce and fiscal policy. For the impact of electronic commerce on fiscal policy, I will pay particular attention to the potential sales-tax revenue losses. The data suggest that the potential losses are actually modest over the next several years. I will also consider the reverse relationship – how fiscal policy affects Internet commerce. Here the evidence suggests that taxes have a sizable effect. I point out, though, that this only supports special treatment if there is some positive externality. Without one, the tax system will lead to excessive online buying to avoid taxes. I will then deal the neglected issue of taxes and Internet access, which can create large deadweight costs both because demand may be price-sensitive and because taxes can slow the spread of new technologies. Finally, I offer some discussion of the international context of taxes and the Internet and the international temptations to raise rates on E-commerce.

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  1. University of Chicago, Graduate School of Business, Chicago, IL, USA

    Austan Goolsbee (Professor of Economics)

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  1. Austan Goolsbee
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Correspondence to Austan Goolsbee .

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    Goolsbee, A. (2009). Implications of Electronic Commerce for Fiscal Policy. In: Lehr, W., Pupillo, L. (eds) Internet Policy and Economics. Springer, Boston, MA. https://doi.org/10.1007/b104899_9

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    • DOI: https://doi.org/10.1007/b104899_9

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    • Print ISBN: 978-1-4419-0037-1

    • Online ISBN: 978-1-4419-0038-8

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