As Congress weighs Internet sales tax proposals, it should look to Europe’s unpleasant experience with the Value Added Tax (VAT) system for guidance on what not to do.
The European Commission (EC) is calling for major reform of its current tax collection system for its 28 member countries because the VAT has proven harmful to retailers and is slowing cross-border purchases. Now the EC is advocating for a tax structure based not on where the buyer is (as is currently the case), but on where the seller is, helping to create what it calls a “Single Digital Market.”