Even as President Clinton and the nation's governors all but agreed on no Net taxes at least for the rest of the year, a leading Internet economy researcher says over $500 million in Internet sales taxes went uncollected online last year.
Forrester Research says only 20 percent of nearly $13 billion in taxable retail good sold online last year was taxed by the states, but only $140 million in taxes were collected while $525 million were "left on the table".
The firm says the five states which "lost" the most online sales tax dollars were California ($73.8 million), Texas ($51.9 million), Illinois ($32.6 million), Florida ($30.3 million), and New York ($26.6 million).
"If left as is," says Forrester Research researcher James McQuivey, "taxation issues will only get worse as online retail sales grow to $184 billion in 2004." He says that, "ironically," out of 8,900 online consumers surveyed only 22 percent actually shopped around to avoid paying online sales tax.
Forrester says it believes Internet, catalog, and brick-and-mortar retail sales should be taxed equally - based on a purchaser's physical location. But critics of e-taxes say Internet taxation of nearly any sort would fly in the face of the Constitution's commerce clause.
"New technology will enable companies to easily collect taxes across multiple locations," says eBusiness Trade Research analyst Steven Kafka. "Also, retail taxes won't keep consumers from shopping online because they seek convenience, selection, and added services - not a tax break. (And) state governments will not relinquish potential revenue from tax dollars to retailers and consumers."
