The Globalization of Taxation? Electronic Commerce and the Transformation of the State

International Studies Quarterly 47:2 (June 2003), pp. 153-82

Abstract: The anticipated growth of new communications technologies, including the Internet and other digital networks, will make it increasingly difficult for states to tax global commerce effectively. Greater harmonization and coordination of national tax policies will likely be required in the coming years in order to address this problem. Given that the history of the state is inseparable from the history of taxation, this ‘‘globalization of taxation’’ could have far-reaching political implications. The modern state itself emerged out of a fiscal crisis of medieval European feudalism, which by the 14th and 15th centuries was increasingly incapable of raising sufficient revenues to support the mounting expenses of warfare. If new developments in the technology of commerce are now undermining the efficiency of the state as an autonomous taxing entity, fiscal pressures may produce a similar shift in de facto political authority away from the state and toward whatever international mechanisms are created to expedite the taxation of these new forms of commerce.