One victim that suffers most directly from the lack of Internet taxes is the state and local government. The proposed ITFA would prevent states and localities from levying taxes on many communications and transactions conducted over the Internet for a minimum of three years. This "moratorium" on taxation of Internet and electronic commerce could have far-reaching effects on state and local revenues that “a new report by the General Accounting Office (GAO) claimed that state and local g

As e-commerce can be viewed as an opportunity to modify new tax systems to address today’s business model, it is important to offer a solution which treats all parties involved fairly. I would like to combine the first and the second proposal with a slight revision. State needs to mandate a uniformity of less than 5 percent flat rate on all sales products all over country, not just different states. This rate seems most reasonable to all parties involved. If there’s no tax collected online, government will loss revenues as well as online companies. If the tax rate is higher than 5 percent, consumers cannot afford the purchase; in addition, many online companies will lose revenues. A flat rate of tax is essential to avoid confusing consumers, to benefit offline business and somehow protect online business, and to sustain government profits; as a result the whole nation’s economy can keep prospering.

The third and the last solution is proposed by the 29-member Organization For Economic Cooperation and Development (OECD) that “any taxation scheme should levy taxes on goods based on where they were consumed rather than where they were produced” (page 4).

Due to many conflicts among three parties: governments, consumers, and businesses, different parties have proposed different solutions over the Internet Taxation issue.

To add to the complexity in taxing the Internet, we have to point out that a sound system has not been developed yet to collect Internet taxes even if the ITFA does not exist. “Given the high costs associated with collecting and remitting use taxes under the current system, many executives argued that the costs of implementing the taxes would lead to the death of many online firms” (page 2). Overall the major confli

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