RealTime IT News

Sales Tax Would Harm E-Commerce

Seventy-five percent of online buyers will buy less on the Internet if sales taxes are instituted on the World Wide Web, according to a survey by BizRate.com.

BizRate's Flash Survey compiled feedback from nearly 7,000 online buyers regarding online sales and taxation to examine the possible impact of a tax on e-commerce sales.

The survey was conducted over a two-day period in August in association with the Association for Interactive Media (AIM).

While 38 percent of respondents said they had at some point paid sales tax for any online purchase, 88 percent said they did not pay sales tax for their most recent purchase, and nearly half would not have made their most recent purchase if it included tax.

Other findings of the BizRate.com survey include:

  • 46 percent of respondents have never paid sales tax for any online purchase
  • 55 percent of respondents were aware that the US Congress was studying the need for a sales tax on Internet purchases
  • 8 percent of respondents said they would never shop online again with an Internet sales tax.

"These results emphasize that a domestic tax on e-commerce could stifle the ability for US merchants to succeed in a global marketplace," said Ben Isaacson, acting executive director of AIM. "In the virtual environment of the Web, consumers don't recognize state borders and are now telling us they will make the same purchases anywhere in the world to get a discount."