Why Digital Services Taxes Are a Detrimental and Inefficient Approach

• Many U.S. states are considering implementing taxes on digital advertising and data mining.
• Advocates argue that these taxes can fill gaps in consumption tax regimes and balance dominant market positions.
• However, a report argues that these taxes are problematic for several reasons.
• DSTs target business activities and result in the pyramiding of taxes.
• Sales tax exemptions for crucial digital inputs are already unevenly distributed across industries.
• Administering DSTs is challenging due to the difficulty of defining digital products and determining taxable value.
• The report concludes that tax authorities should not consider DSTs and focus on improving sales tax systems.

Source: vertexinc.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---