Numbers show reality of e-sales

New data from the Census Bureau will likely fuel the divisive debate on whether to charge sales tax on online purchases

The Census Bureau today issued its first report on retail electronic commerce

sales, reporting that Americans spent more than $5 billion buying retail

goods over the Internet in the last quarter of 1999.

While it appears that e-commerce took off like a rocket during the heavy

Christmas shopping season, it still accounted for only .6 percent of the

$821.2 billion in total retail sales during that period, according to the

Census Bureau, which tracks all retail sales.

Still, the new information is likely to fuel the debate over whether to

impose sales tax on goods sold online.

State and municipal leaders are torn over the issue. A contentious commission

headed by Virginia Gov. James Gilmore will meet later this month to come

up with a recommendation on whether to extend the moratorium on taxing Internet

purchases. The three-year moratorium ends in 2001.

California Gov. Gray Davis speaks for many when he says that he opposes

Internet sales taxes because they might "kill the golden goose laying the

egg."

Yet cities and counties fear the loss of sales tax revenue and say cyberspace

purchases should be treated no differently than items bought at bricks and

mortar stores. "The point is not whether it's going to hurt or hinder. There

is a need for the collection of sales tax," said Shawn Bullard, a spokesman

for the National Association of Counties.

In a speech heralding the trend toward e-shopping, Commerce Secretary William

Daley said Thursday that the "old pigeonholes we use for retail sales don't

work for cybershopping."

He said the Census Bureau's plan to regularly report on Internet retail

sales would help the government keep tabs on its growth and on the shopping

habits of Americans.

"Billions of dollars of decisions are being made by [those] who have a need

for accurate statistics," Daley said. "This number is the new benchmark

— our first government economic indicator for the e-economy."

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