The impact of sales taxation on internet commerce -- An empirical analysis

Shamim Ahmed and Tony S. Wirjanto

Economics Letters, 2008, vol. 99, issue 3, pages 557-560

Abstract: This paper examines how sales taxation on Internet purchases could affect the decision to buy goods over the Internet. The results appear robust with respect to unobserved technological sophistication or other alternative explanations. The tax effect is found to be significant and its magnitude suggests that applying a provincial average sales tax of 14% to all Internet sales in Canada would reduce the number of online buyers by as much as 44%.

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