Consumers appear indifferent to online sales tax

[May 7th 2001]

Jupiter Media Metrix has reported that while the October 2001 expiration of the Internet Tax Freedom Act of 1998 will eventually lead to the demise of the Internet's tax-free status, the anticipated sales tax on all online purchases will not alter consumers' purchasing habits. According to a Jupiter Consumer survey of U.S. online buyers that have abandoned a purchase in the past, 74 percent do not choose one online retailer over another to avoid sales tax for purchases under $50.

Under current legislation, state and local governments risk losing up to $7.7 billion in lost tax revenues from online sales in 2005, according to Jupiter analysts. This loss represents seven percent of total sales tax revenue.

"Many brick-and-mortar retail companies launched separate online businesses in order to compete with nimble Internet-only retailers sheltered under the Internet Tax Freedom Act," said Heather Dougherty, Jupiter analyst. "But times have changed: the Tax Freedom Act, which intended to protect nascent Internet companies and stimulate e-commerce, is set to expire; the threat of Internet-only retailers now is miniscule; and state and local governments are feeling the sting of lost tax dollars. With the end of the tax-free Internet approaching, retailers must merge their online and offline tax-calculation and -collection capabilities, as well as integrate their Web and in-store functions to streamline customer service as well as overall business operations."

Links
Jupiter Media Metrix		http://www.jmm.com