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
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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