We Can Solve the US State Sales Tax Gap by Looking Overseas

The sales tax gap—the difference between taxes owed and taxes collected—for any given US state is very difficult to ascertain. State taxing authorities only find out about a transaction when it’s reported by one of the parties to it. We can only estimate how much tax revenue is going uncollected or unremitted through extrapolation and audit of suspected noncompliant businesses.

But in another hemisphere, Fiji has introduced and proven an effective digital invoicing system that closes the information gap, ensuring all transactions subject to their sales tax equivalent, a value-added tax, are reported to the tax authority. This system could ...